You have found your dream home. The selling price is $300,000.
You will put $60,000 as down payment and obtain a 30-year
fixed-rate mortgage loan at 4.5 percent annual interest rate for
the rest.
a) You are required to make an equal payment every monthfor 360
months to pay off the balance on the loan. Assume that the first
payment begins in one month after you obtained the loan. What will
each monthly payment be?
b) If you want to pay off the remaining principal on your mortgage
loan after 10 years (i.e., 120 months), how much will you have to
pay? Assume that you have never missed your payments during the
first ten years after you obtained the loan. The bank that you
obtained the loan from imposes no charges for early payoff of the
loan.
Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
Cell reference -
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