Updated Mtg Example 7-7-2009

# Updated Mtg Example 7-7-2009 - Mortgage Example from Class...

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Mortgage Example from Class on 7/7/2009 Given: Annual Gross (pre-tax) Income \$144,000.00 Life of Mortgage Loan in Years 30 Frequency of Payments (number of payments in a year) 12 Tax Rate 34% Assumed annual appreciation in real estate 4.50% Quoted 30-year Fixed Rate Mortgage Rate (yearly) 5.36% Rules of Thumb Max(Loan to Value Ratio) 0.8 Max(Monthly Payment/Monthly Gross Income) 0.28 Questions: 1. What is the most expensive house you can buy? 2. What is the tax saved in 2016 (assume tax rate of 34%)? 3. What is your equity at the end of year 2025? Intermediate Calculations Monthly Gross Income \$12,000.00 0.44667% \$3,360.00 AF(r,n)=AF(0.447%, 360) 178.88 \$601,034.13 \$751,292.66 Number of Payments up to beginning of 2016 76 AF(r,n)=AF(0.447%, 360-76) 160.7375 \$540,077.86 Number of Payments up to end of 2016 88 AF(r,n)=AF(0.447%, 360-88) 157.2686 \$528,422.47 \$11,655.40 Interest in 2016 \$28,664.60 Tax Savings in 2016 \$9,745.97 Number of Payments up to end of 2016 196 AF(r,n)=AF(0.447%, 360-196) 116.0878 \$390,055.07 \$1,541,849.17 Value of your equity \$1,151,794.10 r M , the monthly rate C , the [Maximum] Monthly Payment L , the [Maximum] Loan Amount V , the [Maximum] Value of the House RP 76, The Remaining Principal at the beginning of 2016 RP 88, The Remaining Principal at the end of 2016 Repayment in 2016 = RP 76 - RP 88 RP 88, The Remaining Principal at the end of 2016 V 196 , the value of the house at the end of 2025

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Amount Outstanding at the beginning of the period Interest [1] [2] 0 8/1/2009 1 9/1/2009 \$601,034.13 \$2,684.62 2 10/1/2009 \$600,358.75 \$2,681.60 77 1/1/2016 \$540,077.86 \$2,412.35 78 2/1/2016 \$539,130.21 \$2,408.11 79 3/1/2016 \$538,178.33 \$2,403.86

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Updated Mtg Example 7-7-2009 - Mortgage Example from Class...

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