Calculate the equity in your home after 10 years.

Question

When you purchase a home by securing a mortgage, the total paid toward the principal is your equity in the home. (Technically, the lending agency calculates your equity by subtracting the amount you still owe on your mortgage from the current value of your home, which may be higher or lower than your principal.) Assume that your mortgage is for $350,000 at a monthly rate of 0.002 as a decimal and that the term of the mortgage is 30 years. Then your equity after k monthly payments is
350,000 × 1.002^k − 1/1.002^360 − 1 dollars.

Calculate the equity in your home after 10 years

I am taking an online math class and the book does not teach us how to do these problems. Help!

Answer 1

The answer is very simple. You have the equation, which relates equity, E, with the number of months, k, you made your payments towards the principal. Now if you made payments for 10 years, how many months have you made your payments for? Once you find this out, plug in the number you obtained for k into the main equation and calculate.