Question

You just took a fixed-rate mortgage for $250,000 at 4.50% for 30 years, monthly payments, two discount points. Before you make any payments you receive a nice raise so you plan to pay an extra $160 per month on top of your normal payment.

A. (1 pt) How many monthly payments do have to make at the higher payment to fully amortize the loan?

B. (1 pt) What is your net interest savings over the life of the loan, assuming the loan is held to its maturity?

C. (1 pt) If you make this higher payment and hold the loan for its full life, what is the effective cost of the loan?

Answer #1

Adam Wilson just purchased a home and took out a $250,000
mortgage for 30 years at 8%, compounded monthly.
a. How much is Adam’s monthly mortgage payment?
b. How much sooner would Adam pay off his mortgage if he made an
additional $100 payment each month? The financial tables in
Appendix A are not sufficiently detailed to do parts (c) and
(d).
c. Assume Adam makes his normal mortgage payments and at the end
of five years, he refinances the...

Suppose you take a fixed-rate mortgage for $200,000 at 5.00% for
30 years, monthly payments.
A. (1 pt) How much of the payment is interest for month
100?
Answer: ________
B. (1 pt) How much interest do you pay in the first six
years?
Answer: ________

Exactly 18 years ago, you took out a $550,000 30-year mortgage
with monthly payments and
an APR of 10% compounded monthly. You have just made your 216th
payment. What is the
outstanding balance on your loan?

You need a 25-year, fixed-rate mortgage to buy a new home for
$250,000. Your mortgage bank will lend you the money at a 7.1
percent APR for this 300-month loan. However, you can afford
monthly payments of only $900, so you offer to pay off any
remaining loan balance at the end of the loan in the form of a
single balloon payment.
Required:
How large will this balloon payment have to be for you to keep
your 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?

You take out a $25,000 30 years mortgage with monthly payments
and a rate of 3.5%, monthly compounded. What is your monthly
mortgage payment?
You take out a $25,000 30 years mortgage with monthly payments
and a rate of 3.5%, monthly compounded. What is the loan balance by
the end of year 15?
Calculate the future value at the end of year 4 of an
investment fund earning 7% annual interest and funded with the
following end-of-year deposits: $1,500 in...

1. Calculate the monthly payment for a 30-year fixed
rate mortgage of $500,000 with 6% mortgage rate and a balloon
payment of $300,000 at maturity.
2. Assume we have a $2 million 10 year mortgage with
annual payments beginning in exactly one year; the interest rate is
8%. Determine the annual mortgage payment under the following
assumptions. In each case verify your calculation by giving the
relation between the pay rate and the accrual rate.
A) Loan is fully amortizing...

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)?

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)?

You take out standard 30-year mortgage with fixed monthly
payments to purchase your house. The mortgage is for $250,000 with
a nominal annual rate of 4.6% (Monthly compounding). Each month,
you send in a check for $1,403.81, which is above the required
payment, where the excess payment directly reduces the outstanding
balance each month. What portion of your payments in months 25-36
go towards interest?

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