Question

Peifan is taking an Interest Only loan to purchase a \$669,425 property with 0.9 LTV. The...

Peifan is taking an Interest Only loan to purchase a \$669,425 property with 0.9 LTV. The loan is issued for 15 years with monthly payments and has a fixed interest rate at 5%. Under this mortgage contract, what will be Peifan's payment in the first month of the loan? State your answer as a number rounded to the nearest cent (e.g. if your answer is \$1,000.568, write 1000.57).

- Property Value = \$669,425

Loan to Value(LTV) ratio = 0.9

Loan amount = LTV*Property Value = \$669,425*0.9

Loan amount =\$602,482.50

- Peifan is taking an Interest Only loan, Peifan will only pay Interest on monthly payment iwth principal remain unchanged.

Monthly Payment = Loan amount*Interest Rate*1/12

Monthly Payment = \$602,482.50*5%*1/12

Monthly Payment = \$2510.34

So, Peifan's payment in the first month of the loan is \$2510.34

If you like my answer, then please up-vote as it will be motivating

Earn Coins

Coins can be redeemed for fabulous gifts.