Question

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You are planning to buy a house in New Jersey. You put a 20% down payment,...

You are planning to buy a house in New Jersey. You put a 20% down payment, and 15-year mortgage rates are at 4.2% -Price of the house is $400,000.

A. Calculate the 1st month interest payments

B.Calculate the 1st month principal payments
C.  Calculate the monthly payments.

Place answer in the box below and use 2 decimals and no $ sign

Solutions

Expert Solution

Price of House

$400,000

Loan amount (80% of price)

$320,000

Rate of interest

4.2% p.a.

Monthly Interest rate (4.2%/12) (r)

0.35%

Loan tenor (t)

15 years = 180 months

Annuity factor can be calculated using below formula:

Annuity factor = (1/r)*{1-(1/ (1+r)t)}

Where, r = periodic interest rate

t = total number of payments

Monthly loan payment = Loan amount / Annuity factor

Monthly Payment= 320000 / (1/0.35%)*{1-(1/ (1+0.35%)180)}

Monthly Payment = 2399.20

a. 1st month interest payments

1st month interest payments = 320000*0.35% = 1120

b. 1st month principal payments

1st month principal payments = Monthly payment - 1st month interest payments

1st month principal payments = 2399.20 – 1120 = 1279.20

c. Monthly payments

As calculated above, Monthly Payment = 2399.20

Full Amortization schedule:

Number of pay out
(t)		 Balance at beginning of payment
(A)		 Interest
(I = A*r%)		 Monthly payment
(M)		 Amortisation of loan
(B) = (M)-(I)		 Balance at end of payment
(C) = (A) -(B)
1 320000.00 1120.00 2399.20 1279.20 318720.80
2 318720.80 1115.52 2399.20 1283.68 317437.12
3 317437.12 1111.03 2399.20 1288.17 316148.95
4 316148.95 1106.52 2399.20 1292.68 314856.27
5 314856.27 1102.00 2399.20 1297.20 313559.07
6 313559.07 1097.46 2399.20 1301.74 312257.32
7 312257.32 1092.90 2399.20 1306.30 310951.02
8 310951.02 1088.33 2399.20 1310.87 309640.15
9 309640.15 1083.74 2399.20 1315.46 308324.69
10 308324.69 1079.14 2399.20 1320.06 307004.62
11 307004.62 1074.52 2399.20 1324.68 305679.94
12 305679.94 1069.88 2399.20 1329.32 304350.62
13 304350.62 1065.23 2399.20 1333.97 303016.64
14 303016.64 1060.56 2399.20 1338.64 301678.00
15 301678.00 1055.87 2399.20 1343.33 300334.67
16 300334.67 1051.17 2399.20 1348.03 298986.64
17 298986.64 1046.45 2399.20 1352.75 297633.89
18 297633.89 1041.72 2399.20 1357.48 296276.41
19 296276.41 1036.97 2399.20 1362.23 294914.18
20 294914.18 1032.20 2399.20 1367.00 293547.18
21 293547.18 1027.42 2399.20 1371.79 292175.39
22 292175.39 1022.61 2399.20 1376.59 290798.80
23 290798.80 1017.80 2399.20 1381.41 289417.40
24 289417.40 1012.96 2399.20 1386.24 288031.16
25 288031.16 1008.11 2399.20 1391.09 286640.07
26 286640.07 1003.24 2399.20 1395.96 285244.10
27 285244.10 998.35 2399.20 1400.85 283843.26
28 283843.26 993.45 2399.20 1405.75 282437.51
29 282437.51 988.53 2399.20 1410.67 281026.84
30 281026.84 983.59 2399.20 1415.61 279611.23
31 279611.23 978.64 2399.20 1420.56 278190.67
32 278190.67 973.67 2399.20 1425.53 276765.14
33 276765.14 968.68 2399.20 1430.52 275334.61
34 275334.61 963.67 2399.20 1435.53 273899.08
35 273899.08 958.65 2399.20 1440.55 272458.53
36 272458.53 953.60 2399.20 1445.60 271012.93
37 271012.93 948.55 2399.20 1450.66 269562.28
38 269562.28 943.47 2399.20 1455.73 268106.54
39 268106.54 938.37 2399.20 1460.83 266645.72
40 266645.72 933.26 2399.20 1465.94 265179.77
41 265179.77 928.13 2399.20 1471.07 263708.70
42 263708.70 922.98 2399.20 1476.22 262232.48
43 262232.48 917.81 2399.20 1481.39 260751.09
44 260751.09 912.63 2399.20 1486.57 259264.52
45 259264.52 907.43 2399.20 1491.78 257772.75
46 257772.75 902.20 2399.20 1497.00 256275.75
47 256275.75 896.97 2399.20 1502.24 254773.51
48 254773.51 891.71 2399.20 1507.49 253266.02
49 253266.02 886.43 2399.20 1512.77 251753.25
50 251753.25 881.14 2399.20 1518.06 250235.19
51 250235.19 875.82 2399.20 1523.38 248711.81
52 248711.81 870.49 2399.20 1528.71 247183.10
53 247183.10 865.14 2399.20 1534.06 245649.04
54 245649.04 859.77 2399.20 1539.43 244109.61
55 244109.61 854.38 2399.20 1544.82 242564.79
56 242564.79 848.98 2399.20 1550.22 241014.57
57 241014.57 843.55 2399.20 1555.65 239458.92
58 239458.92 838.11 2399.20 1561.09 237897.82
59 237897.82 832.64 2399.20 1566.56 236331.26
60 236331.26 827.16 2399.20 1572.04 234759.22
61 234759.22 821.66 2399.20 1577.54 233181.68
62 233181.68 816.14 2399.20 1583.07 231598.61
63 231598.61 810.60 2399.20 1588.61 230010.01
64 230010.01 805.04 2399.20 1594.17 228415.84
65 228415.84 799.46 2399.20 1599.75 226816.09
66 226816.09 793.86 2399.20 1605.34 225210.75
67 225210.75 788.24 2399.20 1610.96 223599.79
68 223599.79 782.60 2399.20 1616.60 221983.18
69 221983.18 776.94 2399.20 1622.26 220360.92
70 220360.92 771.26 2399.20 1627.94 218732.99
71 218732.99 765.57 2399.20 1633.64 217099.35
72 217099.35 759.85 2399.20 1639.35 215460.00
73 215460.00 754.11 2399.20 1645.09 213814.91
74 213814.91 748.35 2399.20 1650.85 212164.06
75 212164.06 742.57 2399.20 1656.63 210507.43
76 210507.43 736.78 2399.20 1662.43 208845.01
77 208845.01 730.96 2399.20 1668.24 207176.76
78 207176.76 725.12 2399.20 1674.08 205502.68
79 205502.68 719.26 2399.20 1679.94 203822.74
80 203822.74 713.38 2399.20 1685.82 202136.92
81 202136.92 707.48 2399.20 1691.72 200445.19
82 200445.19 701.56 2399.20 1697.64 198747.55
83 198747.55 695.62 2399.20 1703.58 197043.97
84 197043.97 689.65 2399.20 1709.55 195334.42
85 195334.42 683.67 2399.20 1715.53 193618.89
86 193618.89 677.67 2399.20 1721.53 191897.35
87 191897.35 671.64 2399.20 1727.56 190169.79
88 190169.79 665.59 2399.20 1733.61 188436.19
89 188436.19 659.53 2399.20 1739.67 186696.51
90 186696.51 653.44 2399.20 1745.76 184950.75
91 184950.75 647.33 2399.20 1751.87 183198.88
92 183198.88 641.20 2399.20 1758.01 181440.87
93 181440.87 635.04 2399.20 1764.16 179676.71
94 179676.71 628.87 2399.20 1770.33 177906.38
95 177906.38 622.67 2399.20 1776.53 176129.85
96 176129.85 616.45 2399.20 1782.75 174347.10
97 174347.10 610.21 2399.20 1788.99 172558.12
98 172558.12 603.95 2399.20 1795.25 170762.87
99 170762.87 597.67 2399.20 1801.53 168961.34
100 168961.34 591.36 2399.20 1807.84 167153.50
101 167153.50 585.04 2399.20 1814.16 165339.34
102 165339.34 578.69 2399.20 1820.51 163518.83
103 163518.83 572.32 2399.20 1826.89 161691.94
104 161691.94 565.92 2399.20 1833.28 159858.66
105 159858.66 559.51 2399.20 1839.70 158018.97
106 158018.97 553.07 2399.20 1846.13 156172.83
107 156172.83 546.60 2399.20 1852.60 154320.23
108 154320.23 540.12 2399.20 1859.08 152461.15
109 152461.15 533.61 2399.20 1865.59 150595.57
110 150595.57 527.08 2399.20 1872.12 148723.45
111 148723.45 520.53 2399.20 1878.67 146844.78
112 146844.78 513.96 2399.20 1885.24 144959.54
113 144959.54 507.36 2399.20 1891.84 143067.69
114 143067.69 500.74 2399.20 1898.46 141169.23
115 141169.23 494.09 2399.20 1905.11 139264.12
116 139264.12 487.42 2399.20 1911.78 137352.34
117 137352.34 480.73 2399.20 1918.47 135433.88
118 135433.88 474.02 2399.20 1925.18 133508.69
119 133508.69 467.28 2399.20 1931.92 131576.77
120 131576.77 460.52 2399.20 1938.68 129638.09
121 129638.09 453.73 2399.20 1945.47 127692.62
122 127692.62 446.92 2399.20 1952.28 125740.35
123 125740.35 440.09 2399.20 1959.11 123781.24
124 123781.24 433.23 2399.20 1965.97 121815.27
125 121815.27 426.35 2399.20 1972.85 119842.42
126 119842.42 419.45 2399.20 1979.75 117862.67
127 117862.67 412.52 2399.20 1986.68 115875.99
128 115875.99 405.57 2399.20 1993.64 113882.35
129 113882.35 398.59 2399.20 2000.61 111881.74
130 111881.74 391.59 2399.20 2007.62 109874.13
131 109874.13 384.56 2399.20 2014.64 107859.48
132 107859.48 377.51 2399.20 2021.69 105837.79
133 105837.79 370.43 2399.20 2028.77 103809.02
134 103809.02 363.33 2399.20 2035.87 101773.15
135 101773.15 356.21 2399.20 2043.00 99730.16
136 99730.16 349.06 2399.20 2050.15 97680.01
137 97680.01 341.88 2399.20 2057.32 95622.69
138 95622.69 334.68 2399.20 2064.52 93558.17
139 93558.17 327.45 2399.20 2071.75 91486.42
140 91486.42 320.20 2399.20 2079.00 89407.42
141 89407.42 312.93 2399.20 2086.28 87321.15
142 87321.15 305.62 2399.20 2093.58 85227.57
143 85227.57 298.30 2399.20 2100.90 83126.67
144 83126.67 290.94 2399.20 2108.26 81018.41
145 81018.41 283.56 2399.20 2115.64 78902.77
146 78902.77 276.16 2399.20 2123.04 76779.73
147 76779.73 268.73 2399.20 2130.47 74649.26
148 74649.26 261.27 2399.20 2137.93 72511.33
149 72511.33 253.79 2399.20 2145.41 70365.92
150 70365.92 246.28 2399.20 2152.92 68213.00
151 68213.00 238.75 2399.20 2160.46 66052.54
152 66052.54 231.18 2399.20 2168.02 63884.52
153 63884.52 223.60 2399.20 2175.61 61708.92
154 61708.92 215.98 2399.20 2183.22 59525.70
155 59525.70 208.34 2399.20 2190.86 57334.84
156 57334.84 200.67 2399.20 2198.53 55136.31
157 55136.31 192.98 2399.20 2206.22 52930.09
158 52930.09 185.26 2399.20 2213.95 50716.14
159 50716.14 177.51 2399.20 2221.69 48494.44
160 48494.44 169.73 2399.20 2229.47 46264.97
161 46264.97 161.93 2399.20 2237.27 44027.70
162 44027.70 154.10 2399.20 2245.10 41782.60
163 41782.60 146.24 2399.20 2252.96 39529.63
164 39529.63 138.35 2399.20 2260.85 37268.79
165 37268.79 130.44 2399.20 2268.76 35000.03
166 35000.03 122.50 2399.20 2276.70 32723.33
167 32723.33 114.53 2399.20 2284.67 30438.66
168 30438.66 106.54 2399.20 2292.67 28145.99
169 28145.99 98.51 2399.20 2300.69 25845.30
170 25845.30 90.46 2399.20 2308.74 23536.56
171 23536.56 82.38 2399.20 2316.82 21219.73
172 21219.73 74.27 2399.20 2324.93 18894.80
173 18894.80 66.13 2399.20 2333.07 16561.73
174 16561.73 57.97 2399.20 2341.24 14220.50
175 14220.50 49.77 2399.20 2349.43 11871.07
176 11871.07 41.55 2399.20 2357.65 9513.42
177 9513.42 33.30 2399.20 2365.90 7147.51
178 7147.51 25.02 2399.20 2374.18 4773.33
179 4773.33 16.71 2399.20 2382.49 2390.83
180 2390.83 8.37 2399.20 2390.83 0.00

jeff jeffy answered 2 years ago
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