Question

Jenn has a mortgage of 200 000$ that she repays over 20 years with payments at the end of each month at a nominal rate of 12% convertible monthly. After 10 years, she pays an amount of principal that reduces her monthly payments to 2000$ from the 11th year on. What amount did she pay back at time 10 on top of her normal monthly payment ?

Answer 1

Calculating Monthly Payment,

Using TVM Calculation,

PMT = [PV = 200,000, FV = 0, N = 240, I = 0.12/12]

PMT = $2,202.17

Calculating Loan Balance after 10 years,

Using TVM Calculation,

FV = [PV = 200,000, PMT = 2,202.17, N = 120, I = 0.12/12]

FV = $153,493.08

Calculating Loan Amount if $2,000 is paid monthly,

Using TVM Calculation,

PV = [FV = 0, PMT = 2,000, N = 120, I = 0.12/12]

PV = $139,401.04

Amount paid at the end of 10th year = 153,493.08 - 139,401.14

Amount paid at the end of 10th year = $14,091.94