Question

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).

Answer 1

- 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

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