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TANFIN12 5.3.027.
The Taylors have purchased a $150,000 house. They made an initial down payment of $10,000 and secored a mortgage with interest charged at the rate of 6%/year on the unpaid balance. Interest
computations are made at the end of each month. If the loan is to be amortized over 30 years, what monthly payment will the Taylors be required to make? (Round your answer to the nearest cent)
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What is their equity (disregarding appreciation after 5 years? After 10 years? After 20 years? (Round your answers to the nearest cent.)
5 years
$
x
10 years
$32840
20 years $74366

1 Answer

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To find their equity in the house after 5 years, we need to find the remaining balance on the mortgage after 5 years of making monthly payments.

The mortgage is for $150,000, and the down payment was $10,000, so the initial balance on the mortgage is $140,000.

Using an amortization calculator, we can find that the monthly payment required to pay off the mortgage over 30 years at 6% interest is $899.33.

After 5 years, the Taylors will have made 60 monthly payments of $899.33, for a total of $53,959.80. Using an amortization calculator again, we can find that the remaining balance on the mortgage after 5 years is $106,040.20.

Therefore, their equity in the house after 5 years is:

$150,000 (original value of the house) - $106,040.20 (remaining balance on the mortgage) = $43,959.80

To find their equity after 10 years and 20 years, we can use the same process. After 10 years, the remaining balance on the mortgage will be $80,159.35, so their equity will be:

$150,000 - $80,159.35 = $69,840.65

After 20 years, the remaining balance on the mortgage will be $27,633.83, so their equity will be:

$150,000 - $27,633.83 = $122,366.17

Therefore, their equity after 5 years is $43,959.80, after 10 years is $69,840.65, and after 20 years is $122,366.17.
User Pankaj Thakur
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