Question

Suppose that you are considering a conventional, fixed-rate 30-year mortgage loan for $100,000. The lender quotes an APR of 6.13%, compounded monthly; mortgage payments would be monthly, beginning one month after the closing on your home purchase. After 13 years of payments, what is the balance outstanding on your loan? Do not round at intermediate steps in your calculation. Round your answer to the nearest penny. Do not type the $ symbol.

Answer 1

Let's find the monthly payment first with the following inputs.

I/Y = Monthly effective rate = 6.13/12 = 0.5108333333%

N = 30 *12 = 360 payments

PV = 100,000

FV = 0

Find PMT

PMT = -$607.9339144

The balance outstanding after 13 years of payment is the present value of the remaining payments.

Number of remaining payments = 360 - 13*12 = 204

Let's find PV with the following inputs

N = 204

I/Y = 0.5108333333%

PMT = -607.9339144

FV = 0

Find PV

PV = $76,920.98618

This is the loan outstanding after 13 years of payment.