You plan to buy a house at $349,000. You only have 15% as down payment and need to finance the remaining value with a 30 year 4.875% fixed rate mortgage. If you expect your house to appreciate 3% annually, and you would like to refinance as soon as your loan balance falls below 80% of your house value, when would you expect to refinance? How about if you finance with a 15 year 4.25% fixed rate mortgage?

Expectation: Use Excel to work out your monthly payment for the 30-year and 15-year mortgage respectively. In Excel, for each month since the first mortgage payment, layout your expected house value, your mortgage balance, and the ratio of your mortgage balance to your expected house value. Highlight the month when this ratio falls below 80%.