Sarah has a mortgage on her house with a balance of $150,000 andthe APR on...

Sarah has a mortgage on her house with a balance of $150,000 and the APR on the loan is 6%. She is currently paying $1,500 a month on the loan, at this rate how many years will it take to repay the loan?

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Expert Solution

Mortgage balance today is $150,000 assuming it as current loan amount for calculation purposes.

Monthly Payment = $1500

Calculating the No of years it would take to pay off the mortgage:-

Where, P = Loan amount = $150,000

r = Periodic Interest rate = 6%/12 = 0.5%

n= no of periods or months

Taking Log on both sides,

n*Log(1.005) = Log(2)

Solving log with financial calculator,

n*0.00216606 = 0.301030

n = 138.98

No of months = 138.98

No of years = 11.58 years

So, the no of years will it take to repay the loan is 11.58 years

jeff jeffy answered 2 years ago

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