Question
In 2015 the Smiths purchased a home for $250,000 with a loan of $200,000 at 4% for 30 years. In 2025 the Jones purchased the
In 2015 the Smiths purchased a home for $250,000 with a loan of $200,000 at 4% for 30 years.
In 2025 the Jones purchased the home for $350,000 but were able to assume the Smith's existing mortgage (the Jones' just took over the remainder of the existing loan).
The Jones' can will also obtain a new loan at 30 years, 9.5% fixed with a limit of an 80% total loan to value (of all debt combined).
If the Jones' can not assume the old loan, they will obtain a new loan at 80% LTV, 30 years, 9.5%.
If the Smith's could increase the home price to make the Jones' indifferent to assuming the loan with an increased purchase price or paying a lower price at the prevailing rate and terms, what would that higher purchase price be?
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