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26 November, 10:55

Trevor and Lynda bought a home in 20013 for $185,000 with a 20% down payment. Their mortgage payments were only applied to interest on the mortgage balance. If they have to sell their home in 2016 for $148,000, what would be the value of their equity?

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  1. 26 November, 11:09
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    Answer: 0

    Explanation:

    Given the following;

    Mortgage value = $185,000

    Down payment = 20% of mortgage value

    Therefore, the down payment made is:

    0.2 * $185,000 = $37,000

    Mortage left = $185,000 - $37,000

    Mortgage left = $148,000

    Since Mortgage payment were only applied to interest on mortgage balance,

    Sales price = $148,000

    Mortgage left = $148,000

    Equity value = 0
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