Question

Tom has taken out a 9-year mortgage for $450,000.00 that requires you to make a payment every month with the first payment being made exactly one month from now. The interest rate is fixed at 3.2 percent for the first three years if compounded monthly.

a. What is the initial monthly payment?

b. Immediately after the fixed-rate period expires, the loan interest rate increases to 4.65%. What is the new monthly payment (assume that the loan fully amortizes over the remaining term)?

Answer #1

LOAN AMORTIZATION
FORMULA |
||

PMT = L*r*(1+r)^n/((1+r)^n-1), where | ||

PMT = Periodic payment [installment] | ||

L = Loan amount | ||

r = interest rate per month | ||

n = number of months | ||

a] | Initial monthly payment = 450000*(0.032/12)*(1+0.032/12)^108/((1+0.032/12)^108-1) = |
$
4,800.94 |

b] | Loan outstanding after 3 years = PV of the remaining 72 (6*12) monthly installments = 4800.94*((1+0.032/12)^72-1)/((0.032/12)*(1+0.032/12)^72) = | $ 314,129.47 |

New monthly payment = 314129.47*(0.0465/12)*(1+0.0465/12)^72/((1+0.0465/12)^72-1) = |
$
5,008.19 |

Suppose you have taken out a $200,000 fully amortizing fixed
rate mortgage loan that has a term of 15 years and an interest rate
of 4.25%. In month two of the mortgage, how much of the monthly
mortgage payment does the principal repayment portion consist
of?

Tom buys a $240,000 home. He must make monthly mortgage
payments for 30 years, with the first payment to be made a month
from now. The annual effective rate of interest is 8%. After 15
years Tom doubles his monthly payment to pay the mortgage off more
quickly. Calculate the interest paid over the duration of the
loan.

Jeremy takes out a 30-year mortgage of 210000 dollars at an
annual interest rate of 7.5 percent compounded monthly, with the
first payment due in one month. How much does he owe on the loan
immediately after the 87th payment?

Assume you have taken out a balloon mortgage loan for $2,000,000
to finance the purchase of a commercial property. The loan has a
term of 3 years but amortizes over 25 years. Calculate the balloon
payment at maturity (Year 3) if the interest rate on this loan is
6%.
a. $2,495,479.19
b. $1,886,474.90
c. $2,196,447.59
d. $5,637.99

7. In order to purchase a house, you have taken out a 30
year mortgage of $200,000 at 4.29% interest per year. You make
payments at the end of every month. What is the amount of each
monthly payment?

Five years ago you took out a 5/1 adjustable rate mortgage and
the five-year fixed rate period has just expired. The loan was
originally for $291,000 with 360 payments at 4.1% APR, compounded
monthly.
a. Now that you have made 60 payments, what is the remaining
balance on the loan?
b. If the interest rate increases by 1.2%, to 5.3% APR,
compounded monthly, what will your new payments be?

Ann gets a fully amortizing 30-year fixed rate mortgage with
monthly payments. The initial balance is $1,000,000. The interest
rate is 3.50%, compounded monthly. What will be Ann’s loan balance
after her 240th payment (if Ann makes exactly the
required monthly payment for 20 years)?
Using your answer from abovr, what fraction of the 241st payment
will go to principal (in percent)?

Gerald has taken out a loan of $100,000 today to start a
business. He has agreed to repay the loan on the following
terms:
• Repayments will be made on a monthly basis. The first
repayment will be made exactly one month from today.
• The repayments for the first 5 years will cover interest
only to help reduce the financial burden for Gerald’s business at
the start.
• After the 5-year interest-only period, Gerald will make
level monthly payments...

10. Five years ago you took out a 5/1 adjustable rate mortgage
and the five-year fixed rate period has just expired. The loan was
originally for $ 250,000 with 360 payments at 5 % APR, compounded
monthly. a. Now that you have made 60 payments, what is the
remaining balance on the loan? b. If the interest rate increases by
1 %, to 6 % APR, compounded monthly, what will be your new
payments?

Ann gets a fully amortizing 30-year fixed rate mortgage with
monthly payments. The initial balance is $1,000,000. The interest
rate is 3.50%, compounded monthly. What will be Ann’s loan balance
after her 240th payment (if Ann makes exactly the required monthly
payment for 20 years)?
Also, Using your answer from Q11, what fraction of the 241st
payment will go to principal (in percent)?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 3 minutes ago

asked 6 minutes ago

asked 7 minutes ago

asked 8 minutes ago

asked 8 minutes ago

asked 9 minutes ago

asked 9 minutes ago

asked 11 minutes ago

asked 11 minutes ago

asked 13 minutes ago

asked 15 minutes ago