Question

A couple has decided to purchase a $150000 house using a down payment of $12000. They can amortize the balance at 9% over 25 years.
a) What is their monthly payment?
Answer = $  
b) What is the total interest paid?
Answer = $  
c) What is the equity after 5 years?
Answer = $  
d) What is the equity after 20 years?
Answer = $

Answer 1

a) Mortgage amount = Purchase price - down payment

Mortgage amount = 150,000 - 12,000

Mortgage amount = $138,000

Monthly interest rate, r = 9%/12 = 0.0075

n = 25 * 12 = 300

Monthly payment = $1,158.0909817987

b) Total interest paid = Monthly payment * n - Mortgage amount

Total interest paid = 1,158.0909817987 * 300 - 138,000

Total interest paid = $209,427.29453961

c) The equity after 5 years

First, let's find the present value of the remaining payments after 5 years,

n = (25 - 5) * 12 = 240 payments remaining

Equity = Purchase price - PV

Equity = 150,000 - 128,715.9689307137

Equity = $21,284.0310692863

d) The equity after 20 years

n = (25 - 20)* 12 = 60

Equity = Purchase price - PV

Equity = 150,000 - 55,789.1494363323

Equity = $94,210.8505636677