Question

A house was bought for $300,000 with a mortgage of $240,000.

The interest rate is 2.8% and the term is 20 years (paid monthly).

If the house appreciates at 2% per year and the selling fees are about 8%, what is the reversion to the homeowner who has occupied the property at the end of year 12?

Answer 1

	Rversion value at the end of 12 years	Amounts $
	Estimated Future value	380472.5384
Less	Remaining loan balance	112306.87
Less	Estimated selling expense	30437.8
	Reversion value	237727.87
	Equal monthly payment for 20 years	=240000/Present value annuity factor(2.8%/12,240 months)
		=240000/183.6078
		1307.134011
	Installment Paid till 12 years	=1307.134*144 months
		188227.296
	Interst paid till then	60534.16211
	Principal repayment	127693.1339
	Closing balance of loan at the end of 12th year	112306.87
	Estimated Future value	=300000*(1.02)12
		380472.5384
	Selling expneses	=380472.5*.08
		30437.8

Repayement schedule as attached.