Question

You have sold your house for $1,100,000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of $750,000. The mortgage is currently exactly 18.5 years old, and you have just made a payment. If the interest rate on the mortgage is 5.25 (APR), how much cash will you have from the sale once you pay off the mortgage?

Answer 1

Solution :-

Amount of Mortgage = $750,000

Total Mortgage Payments = 30 * 12 = 360

Per month Interest Rate = ( 1 + 0.052 )¹² - 1 = 0.004273 = 0.4273%

Now Value of Installment = $750,000 / PVAF ( 0.4273% , 360 )

= $750,000 / 183.605

= $4,084.856

Now after 18.5 Years the time of Mortgage = 11.5 Years = 138 Months

Now the Value of mortgage = $4,084.856 * PVAF ( 0.4273% , 138 )

= $4,084,856 * 104.0943

= $425,210.21

Now Property sold for $1,100,000

Now  cash we have from the sale once you pay off the mortgage = $1,100,000 - $425,210.21

= $674,789.79

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