Question

In: Finance

After working for three years, you decide to purchase your first home, which has a sales...

  1. After working for three years, you decide to purchase your first home, which has a sales price of $350,000. With $70,000 down payment, what is your monthly mortgage payments for a 30-year loan at an annual interest rate of 4.75%. Assume the payments are made at the end of each period (i.e., ordinary annuity).

a) Calculate the monthly installments

b) Build an amortization table for the life of loan. For each payment, show the beginning loan balance, interest payment, principal payment, and ending balance.

Solutions

Expert Solution

Given,

Loan amount = $ 350000

Down payment = $ 70000

Loan period = 30 years

rate of interest (r) = 4.75% or 0.0475

No. of payments (n) = 30 years x 12 months = 360

Principal amount = 350000 - 70000 = 280000

b) Build an amortization table for the life of loan. For each payment, show the beginning loan balance, interest payment, principal payment, and ending balance.

The last closing balance of 2.02 is due to rounding off the calculations.

Monthly installment calculated in the excel is different from manual calculation. Because I have rounded off the calculations in manual calculation.


Related Solutions

You are getting ready to purchase your first home. You wish to purchase a $400,000 home...
You are getting ready to purchase your first home. You wish to purchase a $400,000 home and the bank requires a 20% deposit. Your father-in-law will provide whatever amount you need after using the governments Homestart scheme and you withdraw your savings from Kiwisaver. Interest rates on a 20-year mortgage with fortnightly payments are 6 percent per annum. a. What will your fortnightly payment be on a 20 year mortgage? b. After 5 years of paying off this mortgage, you...
You and your family have recently closed on the purchase of your first home and you...
You and your family have recently closed on the purchase of your first home and you are excited. You are in need of furniture and appliances for your new home. You have decided to purchase some of the items from eBay and have found a dining room set and living room furniture from a private seller on eBay’s website. You look at the pictures on the website and notify the seller through email that you would like to purchase these...
Suppose you decide to purchase a $150,000 home using an inheritance of $20,000 as your down...
Suppose you decide to purchase a $150,000 home using an inheritance of $20,000 as your down payment. A down payment is subtracted from the total cost of the home and therefore you owe $130,000. To pay for this amount you will need a loan, so $130,000 is the principal on your loan. Suppose the interest rate on a 30 year mortgage is 4.75%. What will your monthly payment be? How much will you pay on the loan if you pay...
The next four questions are related to your purchase of your first home for $600,000. You...
The next four questions are related to your purchase of your first home for $600,000. You have just purchased the house and have put a 20% down payment, and will borrow the remaining amount.  The 15-year fixed rate loan has an Annual Percentage Rate (APR) of 3.875%.   You will make monthly payments for the life of the loan. You've made mortgage payments for the first year of the loan. How much have you made in principal payments. Stated differently, by how much...
The next four questions are related to your purchase of your first home for $600,000. You...
The next four questions are related to your purchase of your first home for $600,000. You have just purchased the house and have put a 20% down payment, and will borrow the remaining amount.  The 15-year fixed rate loan has an Annual Percentage Rate (APR) of 3.875%.   You will make monthly payments for the life of the loan. You have made payments for the first year of the loan. How much have you paid in interest for the first year of the...
The next four questions are related to your purchase of your first home for $600,000. You...
The next four questions are related to your purchase of your first home for $600,000. You have just purchased the house and have put a 20% down payment, and will borrow the remaining amount. The 15-year fixed rate loan has an Annual Percentage Rate (APR) of 3.875%. You will make monthly payments for the life of the loan. You have made payments for the first year of the loan. How much have you paid in interest for the first year...
The next four questions are related to your purchase of your first home for $600,000. You...
The next four questions are related to your purchase of your first home for $600,000. You have just purchased the house and have put a 20% down payment, and will borrow the remaining amount. The 15-year fixed rate loan has an Annual Percentage Rate (APR) of 3.875%. You will make monthly payments for the life of the loan. How much is your monthly mortgage payment? Select one: a. $3,500 to $4,000 b. $2,500 to $3,000 c. Less than $2,500 d....
You are considering the purchase of a really nice home in three years. You have $100,000...
You are considering the purchase of a really nice home in three years. You have $100,000 in your bank savings account today but would rather wait to buy the house. You plan to leave the money there for three years under 4% APR with monthly compounding. You understand that this money alone will not be enough to buy the house of your dreams, so when it’s time to buy the house you will have to take out a mortgage loan....
Answer the following questions that are related to your purchase of your first home for $500,000....
Answer the following questions that are related to your purchase of your first home for $500,000. You have just purchased the house and have put a 20% down payment, and will borrow the remaining amount. The 15-year fixed rate loan has an Annual Percentage Rate (APR) of 3.75%. You will make monthly payments for the life of the loan. Q1: Your effective interest rate is closest to which of the following? a. 3.815% b. 3.687% c. 3.880% d. 3.750% Q2....
You are looking to purchase your first home and have picked one out. The house costs...
You are looking to purchase your first home and have picked one out. The house costs $287,000.00, and you saved up 8% in cash and you will need to get a loan/mortgage for the remainder of the purchase price. You also need to get private mortgage insurance, which will cover 25% of your loan amount in the event of default. The PMI involves a 3.5% of loan premium due at closing, which will be added to the loan balance. The...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT