Question

6 years ago fraser family financed their new home with a 4.15 percent fixed rate 30-year mortgage. The house they bought cost $450,000 and they made a 20% down payment on the house.

1. How much did they borrow 6 years ago?

2. What is their monthly mortgage payment?

3. If they keep making these payments for the full loan term how much total interest will they pay on the loan?

4. What is their current loan balance?

Answer 1

1.
Borrowed amount = Cost of house * (1 - percentage of down payment)
= $450,000 * (1 - 20%)
= $360,000

Borrowed amount = $360,000

2.
PV = $360,000
Nper = 30 * 12 = 360
Rate = 4.15% / 12
FV = 0

Monthly payment can be calculated by using the following excel formula:
=PMT(rate,nper,pv,fv)
=PMT(4.15%/12,360,-360000,0)
= $1,749.97

Monthly payment = $1,749.97

3.
Total interest = (Monthly payments * Number of months) - Borrowed amount
= ($1,749.97 * 360) - $360,000
= $269,989.91

Total interest = $269,989.91

4.
Current loan balance = $318,795.58