Question

you are taking out a $100,000 mortgage loan to be repaid over 25 years in 300 monthly payments.

a. if the interest rate is 16% per year, what is the amount of the monthly payment?

b. if you can only afford to pay $1000 per month, how large a loan can you take?

c. if you can afford to pay $1500 per month and need to borrow $100,000, how many months would it take to pay the mortgage?

d. if you can pay $1,500 per month, need to borrow $100,000, and want a 25-year mortgage, what is the highest interest rate you can pay?

Please let me know the formulas you use tx!

Answer 1

a)

Loan amount (PV) = 100,000

Number of payments (nper) = 300

Rate = 16% pa = 16%/12 per month

Amount of monthly payment (PMT) = = $ 1,358.89

b)

Payment per month (PMT) = 1000

Nper = 300

Rate = 16%/12

Loan amount (PV) = = $ 73,589.53

c)

Amount per month (PMT) = 1500

Loan amount(PV) = 100,000

Rate = 16%/12

Number of months to pay off the amount(nper) = = 165.89 months = 166 months

d)

Amount per month (PMT) = 1500

Loan amount (PV) = 100,000

Years of mortgage (nper) = 25 = 25 *12 = 300

Highest interest rate (rate) = = 1.48 % per month = 17.78% pa