Question

Joe and Sue are building a new home and are looking at a 30 year construction loan of $380,000 with the first year being interest only. From years 2 to 30, the loan is a normal amortized loan. The first year is interest only as the house is being built. The interest rate is 4.375% APR. What is the monthly payment for the first year. What is the monthly payment for years 2-30? At the end of 10 years, they decide to move to a new city to pursue new jobs. They can sell their house $492,000 net of closing costs. How much cash will they clear to use towards the purchase of their new home?

Answer 1

What is the monthly payment for the first year.
=380000*4.375%/12=1385.416667

What is the monthly payment for years 2-30?
=380000*(4.375%/12)/(1-1/(1+4.375%/12)^(12*29))=1929.09932

At the end of 10 years, they decide to move to a new city to pursue new jobs. They can sell their house $492,000 net of closing costs. How much cash will they clear to use towards the purchase of their new home?
=492000-380000*(1+4.375%/12)^(12*9)-1929.09932/(4.375%/12)*((1+4.375%/12)^(12*9)-1)
=183798.725