If you buy a home with less than 20% down, you will pay an additional monthly fee, PMI (private mortgage insurance), until you reach 20% equity. Keep track of when you reach 20% equity so you can request to have your PMI removed. Ken Buckmiller’s home recently appraised at $307,000. His mortgage was for $292,000 at 5% for 30 years with PMI of $299.17 per month. What is his monthly payment plus PMI? His mortgage balance is currently $184,200. Has he reached 20% equity? (Use Table 15.1.)

Note: Round your intermediate calculations and final answer to the nearest cent.

Monthly payment

Has he reached 20% equity? Yes

TABLE 15.1

Amortization table (mortgage principal and interest per $1,000)

Rate Interest Only 10 Year 15 Year 20 Year 25 Year 30 Year 40 Year

2.000 0.16667 9.20135 6.43509 5.05883 4.23854 3.69619 3.02826

2.125 0.17708 9.25743 6.49281 5.11825 4.29966 3.75902 3.09444

2.250 0.18750 9.31374 6.55085 5.17808 4.36131 3.82246 3.16142

2.375 0.19792 9.37026 6.60921 5.23834 4.42348 3.88653 3.22921

2.500 0.20833 9.42699 6.66789 5.29903 4.48617 3.95121 3.29778

2.625 0.21875 9.48394 6.72689 5.36014 4.54938 4.01651 3.36714

2.750 0.22917 9.54110 6.78622 5.42166 4.61311 4.08241 3.43728

2.875 0.23958 9.59848 6.84586 5.48361 4.67735 4.14892 3.50818

3.000 0.25000 9.65607 6.90582 5.54598 4.74211 4.21604 3.57984

3.125 0.26042 9.71388 6.96609 5.60876 4.80738 4.28375 3.65226

3.250 0.27083 9.77190 7.02669 5.67196 4.87316 4.35206 3.72541

3.375 0.28125 9.83014 7.08760 5.73557 4.93945 4.42096 3.79930

3.500 0.29167 9.88859 7.14883 5.79960 5.00624 4.49045 3.87391

3.625 0.30208 9.94725 7.21037 5.86404 5.07352 4.56051 3.94923

3.750 0.31250 10.00612 7.27222 5.92888 5.14131 4.63116 4.02526

3.875 0.32292 10.06521 7.33440 5.99414 5.20959 4.70237 4.10198

4.000 0.33333 10.12451 7.39688 6.05980 5.27837 4.77415 4.17938

4.125 0.34375 10.18403 7.45968 6.12587 5.34763 4.84650 4.25746

4.250 0.35417 10.24375 7.52278 6.19234 5.41738 4.91940 4.33620

4.375 0.36458 10.30369 7.58620 6.25922 5.48761 4.99285 4.41559

4.500 0.37500 10.36384 7.64993 6.32649 5.55832 5.06685 4.49563

4.625 0.38542 10.42420 7.71397 6.39417 5.62951 5.14140 4.57629

4.750 0.39583 10.48477 7.77832 6.46224 5.70117 5.21647 4.65758

4.875 0.40625 10.54556 7.84297 6.53070 5.77330 5.29208 4.73947

5.000 0.41667 10.60655 7.90794 6.59956 5.84590 5.36822 4.82197

5.125 0.42708 10.66776 7.97320 6.66881 5.91896 5.44487 4.90505

5.250 0.43750 10.72917 8.03878 6.73844 5.99248 5.52204 4.98870

5.375 0.44792 10.79079 8.10465 6.80847 6.06645 5.59971 5.07293

5.500 0.45833 10.85263 8.17083 6.87887 6.14087 5.67789 5.15770

5.625 0.46875 10.91467 8.23732 6.94966 6.21575 5.75656 5.24302

5.750 0.47917 10.97692 8.30410 7.02084 6.29106 5.83573 5.32888

5.875 0.48958 11.03938 8.37118 7.09238 6.36682 5.91538 5.41525

6.000 0.50000 11.10205 8.43857 7.16431 6.44301 5.99551 5.50214

6.125 0.51042 11.16493 8.50625 7.23661 6.51964 6.07611 5.58952

6.250 0.52083 11.22801 8.57423 7.30928 6.59669 6.15717 5.67740

6.375 0.53125 11.29130 8.64250 7.38232 6.67417 6.23870 5.76575

6.500 0.54167 11.35480 8.71107 7.45573 6.75207 6.32068 5.85457

6.625 0.55208 11.41850 8.77994 7.52950 6.83039 6.40311 5.94385

6.750 0.56250 11.48241 8.84909 7.60364 6.90912 6.48598 6.03357

6.875 0.57292 11.54653 8.91854 7.67814 6.98825 6.56929 6.12373

7.000 0.58333 11.61085 8.98828 7.75299 7.06779 6.65302 6.21431

7.125 0.59375 11.67537 9.05831 7.82820 7.14773 6.73719 6.30531

7.250 0.60417 11.74010 9.12863 7.90376 7.22807 6.82176 6.39672

7.375 0.61458 11.80504 9.19923 7.97967 7.30880 6.90675 6.48852

7.500 0.06250 11.87017 9.27101 8.05593 7.38991 6.99215 6.58071

7.625 0.63542 11.93552 9.34130 8.13254 7.47141 7.07794 6.67327

7.750 0.64583 12.00106 9.41276 8.20949 7.55329 7.16412 6.76620

7.875 0.65625 12.06681 9.48450 8.28677 7.63554 7.25069 6.85948

8.000 0.66667 12.13276 9.55652 8.36440 7.71816 7.33765 6.95312

Question

If you buy a home with less than 20% down, you will pay an additional monthly fee, PMI (private mortgage insurance), until you reach 20% equity. Keep track of when you reach 20% equity so you can request to have your PMI removed. Ken Buckmiller’s home recently appraised at $307,000. His mortgage was for $292,000 at 5% for 30 years with PMI of $299.17 per month. What is his monthly payment plus PMI? His mortgage balance is currently $184,200. Has he reached 20% equity? (Use Table 15.1.)

Note: Round your intermediate calculations and final answer to the nearest cent.

Monthly payment
Has he reached 20% equity?	Yes

TABLE 15.1

Amortization table (mortgage principal and interest per $1,000)

Rate	Interest Only	10 Year	15 Year	20 Year	25 Year	30 Year	40 Year
2.000	0.16667	9.20135	6.43509	5.05883	4.23854	3.69619	3.02826
2.125	0.17708	9.25743	6.49281	5.11825	4.29966	3.75902	3.09444
2.250	0.18750	9.31374	6.55085	5.17808	4.36131	3.82246	3.16142
2.375	0.19792	9.37026	6.60921	5.23834	4.42348	3.88653	3.22921
2.500	0.20833	9.42699	6.66789	5.29903	4.48617	3.95121	3.29778
2.625	0.21875	9.48394	6.72689	5.36014	4.54938	4.01651	3.36714
2.750	0.22917	9.54110	6.78622	5.42166	4.61311	4.08241	3.43728
2.875	0.23958	9.59848	6.84586	5.48361	4.67735	4.14892	3.50818
3.000	0.25000	9.65607	6.90582	5.54598	4.74211	4.21604	3.57984
3.125	0.26042	9.71388	6.96609	5.60876	4.80738	4.28375	3.65226
3.250	0.27083	9.77190	7.02669	5.67196	4.87316	4.35206	3.72541
3.375	0.28125	9.83014	7.08760	5.73557	4.93945	4.42096	3.79930
3.500	0.29167	9.88859	7.14883	5.79960	5.00624	4.49045	3.87391
3.625	0.30208	9.94725	7.21037	5.86404	5.07352	4.56051	3.94923
3.750	0.31250	10.00612	7.27222	5.92888	5.14131	4.63116	4.02526
3.875	0.32292	10.06521	7.33440	5.99414	5.20959	4.70237	4.10198
4.000	0.33333	10.12451	7.39688	6.05980	5.27837	4.77415	4.17938
4.125	0.34375	10.18403	7.45968	6.12587	5.34763	4.84650	4.25746
4.250	0.35417	10.24375	7.52278	6.19234	5.41738	4.91940	4.33620
4.375	0.36458	10.30369	7.58620	6.25922	5.48761	4.99285	4.41559
4.500	0.37500	10.36384	7.64993	6.32649	5.55832	5.06685	4.49563
4.625	0.38542	10.42420	7.71397	6.39417	5.62951	5.14140	4.57629
4.750	0.39583	10.48477	7.77832	6.46224	5.70117	5.21647	4.65758
4.875	0.40625	10.54556	7.84297	6.53070	5.77330	5.29208	4.73947
5.000	0.41667	10.60655	7.90794	6.59956	5.84590	5.36822	4.82197
5.125	0.42708	10.66776	7.97320	6.66881	5.91896	5.44487	4.90505
5.250	0.43750	10.72917	8.03878	6.73844	5.99248	5.52204	4.98870
5.375	0.44792	10.79079	8.10465	6.80847	6.06645	5.59971	5.07293
5.500	0.45833	10.85263	8.17083	6.87887	6.14087	5.67789	5.15770
5.625	0.46875	10.91467	8.23732	6.94966	6.21575	5.75656	5.24302
5.750	0.47917	10.97692	8.30410	7.02084	6.29106	5.83573	5.32888
5.875	0.48958	11.03938	8.37118	7.09238	6.36682	5.91538	5.41525
6.000	0.50000	11.10205	8.43857	7.16431	6.44301	5.99551	5.50214
6.125	0.51042	11.16493	8.50625	7.23661	6.51964	6.07611	5.58952
6.250	0.52083	11.22801	8.57423	7.30928	6.59669	6.15717	5.67740
6.375	0.53125	11.29130	8.64250	7.38232	6.67417	6.23870	5.76575
6.500	0.54167	11.35480	8.71107	7.45573	6.75207	6.32068	5.85457
6.625	0.55208	11.41850	8.77994	7.52950	6.83039	6.40311	5.94385
6.750	0.56250	11.48241	8.84909	7.60364	6.90912	6.48598	6.03357
6.875	0.57292	11.54653	8.91854	7.67814	6.98825	6.56929	6.12373
7.000	0.58333	11.61085	8.98828	7.75299	7.06779	6.65302	6.21431
7.125	0.59375	11.67537	9.05831	7.82820	7.14773	6.73719	6.30531
7.250	0.60417	11.74010	9.12863	7.90376	7.22807	6.82176	6.39672
7.375	0.61458	11.80504	9.19923	7.97967	7.30880	6.90675	6.48852
7.500	0.06250	11.87017	9.27101	8.05593	7.38991	6.99215	6.58071
7.625	0.63542	11.93552	9.34130	8.13254	7.47141	7.07794	6.67327
7.750	0.64583	12.00106	9.41276	8.20949	7.55329	7.16412	6.76620
7.875	0.65625	12.06681	9.48450	8.28677	7.63554	7.25069	6.85948
8.000	0.66667	12.13276	9.55652	8.36440	7.71816	7.33765	6.95312

Accepted Answer

The mortgage are secured loans because the home act as collateral and the loans can be recovered if…