Question

Mr.Ferguson purchased a property for $125,000 with 12 percent cash down. He financed the balance with equal monthly payments of 1048, which included 11 percent interest, and the loan would be fully amortized in 30 years. Mr.Ferguson sold the property for 139,750 before making any payments on the loan. What was his equity at the time of sale?

Answer 1

Mr. Ferguson's equity at the time of sale can be calculated by subtracting the remaining loan balance from the property value.

Step-by-step explanation:

Mr. Ferguson's equity at the time of sale can be calculated by subtracting the remaining loan balance from the property value. The loan balance can be determined by the equal monthly payments of $1048 over a 30-year period, which includes 11 percent interest.

Principal amount = Property value - Down payment

Down payment = Property value * Down payment percentage

Loan balance = Principal amount - Total payments made over 30 years

Equity at the time of sale = Property value - Loan balance

Equity at the time of sale = $139,750 - Loan balance