Question

You have just sold your house for 1 million in cash. Your mortgage was originally a​ 30-year mortgage with monthly payments and an initial balance of 800,000 . The mortgage is currently exactly​ 18½ years​ old, and you have just made a payment. If the interest rate on the mortgage is 7.75% ​(APR), how much cash will you have from the sale once you pay off the​ mortgage? ​(Note: Be careful not to round any intermediate steps less than six decimal​ places.) Cash that remains after payoff of mortgage is ?. ​(Round to the nearest​ dollar.)

Answer 1

Initial Loan Amount = $800,000

- First Calculating the Mortgage Loan Balance after 18.5 years:-

Where, P = Loan amount = $800,000

r = Periodic Interest rate = 7.75%/12 = 0.6458333%

n= no of periods = 30 years*12 = 360

m = no of payments already made = 18.5 years*12 = 222

Outstanding balance = $522,410.60

So, the Mortgage balance when you sold your house is $522,410.60

House Sold for = $1,000,000

- Cash available after paying off mortgage = $1000,000 - $522,410.60

= $477,589.40

SO, cash will you have from the sale once you pay off the​ mortgage is $477,589