Dave has owned his condo for 10 years. He paid $200,000 for the condo, and put down 20%. The interest rate was 4% for a 30-year mortgage loan. What is his loan payoff amount in 2020?
Loan amount = 80% * 200,000 = 160,000, interest rate = 4%, term = 360 months
Monthly payment = - PMT(4%/12, 360, 160000) = $763.86
Loan amortization table can be set up in excel as below
|Month||Opening balance||Interest paid||Principal repaid||Closing balance|
Opening balance (from month 2) = closing balance of prior month, interest paid = interest rate x opening balance, principal repaid = monthly payment - interest paid, closing balance = opening balance - principal repaid
As seen in table above, opening balance after 10 years (month 121) = $126,054
And closing balance at the end of 11th year (month 132) = $121,854
Hence, loan repaid during the year = 126,054 - 121,854 = $4,200.657
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