Why doesn't Home Value remain constant in today's dollars?
I set up two experimental profiles where the ONLY difference between them is the percentage downpayment for my First Change of Home.
In Profile A, I specify 50% downpayment. In Profile B, I specify 20% downpayment. The mortgages in these profiles are 40 year mortgages, and the purchase price of the home is 300K. Annual real appreciation rate is 0.
After 30 years, I compare the values of the mortgages and equities in the two profiles.
Unless I'm thinking of it wrong, I would expect the sum of the mortgage and equity to equal the value of the home, and, therefore, I would expect to see the sum of the mortgage and equity equal 300K in both of the profiles, but they don't. I'm seeing the following:
Profile A Mortgage Balance: 73374
Profile A Equity: 269771
Profile B Mortgage Balance: 117339
Profile B Equity: 251633
There is a total difference of 25,827 in the value of the home, and neither is 300K.
What am I missing? Thanks.
RSS
We just tested this and weren't able to reproduce the problem. You are right that the total should equal $300K. It does in our tests. So there must be something amiss wrt to your database. Please submit a support ticket and upload your data base. We will look into this. best, Larry