If a home buyer purchases a home in 2006 for $225,000 with a 10% down payment using a 30 year fixed mortgage rate at 6.5% and 3.5% closing costs added to the original mortgage, compute the following:

Question

If a home buyer purchases a home in 2006 for $225,000 with a 10% down payment using a 30 year fixed mortgage rate at 6.5% and 3.5% closing costs added to the original mortgage, compute the following:
a) the original amount of the mortgage loan
b) the home's market value in 7 years if annual appreciation rates are 6%
c) the homeowners equity in the home after 7 years

Reiny · Answer

I am not familiar with US mortgage laws.
What is this "3.5% closing cost" ?

so is the original mortgage:
add 3.5% to 225,000, then take 90% of that?
That would be 225,000(1.035)(.9)
= $209,587.50

confirm that before I proceed