Question

2. Jerry and Katrina took out a 30-year, $360,000 mortgage on their 2800-square-foot house. The mortgage rate is 0.4% per month so their payments are $1888.80 per month. How much would they still owe on their mortgage immediately after making their 220th monthly payment?

3. Sue is planning to buy a house. She has been advised by her financial planner that her monthly house payment (which includes property taxes and insurance) should not exceed 30% of her take-home pay. Currently, her take-home pay is $2000 per month. Her monthly property taxes will be approximately $100 and her monthly homeowners insurance will be approximately $50. If Sue’s take-home pay is $2000 per month, and the mortgage is at 0.5% per month for 30 years, what is the maximum amount she can borrow to buy her house?

Answer 1

2.

Loan Duration= 30 years

Monthly installments= $1888.80

Total months in the duration in which the loan has to be repaid= 30X12= 360 months

Money paid in 360 months= $1888.80 X 360= 679968

Now, Total Mortgage amount/ Principle amount= $360,000 (given)

Total interest amount paid in 360 months= total money paid in 360 months – principle amount = 679968-360000= $319968

Monthly interest paid = 319968/360 = $888.80

Monthly principle amount= total amount paid monthly- interest paid monthly= 1888.80-888.80= $1000

Therefore, principle Amount paid in 220 months= $220000

Amount owed immediately after paying 220^th installment (for the remaining 140 months) = 1000 X 140= $140,000