Question

you have just sold your house for $900,000 in cash. Your mortgage was originally a 30 year mortgage with monthly payments and an initial balance of $700,000. The mortgage is currently exactly 18 1/2 years old, and you have just made a payment. If the interest rate on the mortgage is 6.25% APR, how much cash will you have from the sale once you pay off the mortgage?

Answer 1

Answer:

PV = 700000

R = 0.0625/12

N = 30*12 = 360

Using excel function, PMT = PMT(R,N,PV)

PMT(0.0625/12,360,-700000) = 4310.02

	=PMT(0.0625/12,360,-700000)
C	D	E
	4310.02

18.5 years = 222 months

Months remaining = 360-222 = 138

Calculate the present value of the remaining months

PMT = 4310.02

N = 138

Using excel function, PV = PV(R,N,PMT)

PV(0.0625/12,138,-4310.02) = 423468.00

	=PMT(0.0625/12,138,-D3)
C	D	E
	4310.02
	423468.00

So the remaining amount after payoff = 900,000-423468.00 = $476,532