Question

In: Accounting

John Doe has just been offered a home loan towards purchase of house that is being...

John Doe has just been offered a home loan towards purchase of house that is being sold for

​$230,000.

He will be required to make a

15​%

down​ payment, as well as mortgage processing fees and closing costs of

​$3,000.

The loan has to be paid off in monthly payments over a​ 30-year period at a fixed interest rate of

6​%

per year compounded monthly. He will also be required to pay an additional

​$92

per month as mortgage insurance. Using​ Excel, answer the following​ questions:

​(a) The monthly mortgage payment is

​(enter as a positive number to the nearest​ dollar) ​(b) The total monthly payment is

​

​(enter as a positive number to the nearest​ dollar)​(c) The nominal APR is

​(to the nearest 2 decimal​ places)       The effective APR is

​(to the nearest 2 decimal​ places)​(d) Over the​ 30-year period, the total amount of interest paid on the loan is

​

​(enter as a positive number to the nearest​ dollar).​(e) The interest amount in the month

60

payment is

​

​(enter as a positive number to the nearest​ dollar)       The principal amount in the month

60

payment is

​

​(enter as a positive number to the nearest ​dollar)​(f) The balance on the loan immediately after making the payment at the end of  month

60

is

​

​(enter as a positive number to the nearest​ dollar)

Solutions

Expert Solution

House being sold at $230,000

Down payment - 15%

Mortgage processing fees and closing costs of ​$3,000

Fixed interest rate of 6​% per year compounded monthly.

Additional ​$92 per month as mortgage insurance i.e

230000- 15% = $195,500 - $3000 = $192,500 *6% = 11550/12 = 962.5 + 92 (monthly)= 1054.5 = 12654

i.e 12654 *30 = 379,620

House being sold 2,30,000
Loan Amount 192500
Interest 6%
Additional Insurance per month 92
Down Payment 15%
Fees 3000
Monthly 0.005
No of yr 30
Year Opening Balance Payment Interest Principal Loan Balance
1 192500.00 1154.13 962.50 191.63 192308.37
2 192308.37 1154.13 961.54 192.59 192115.77
3 192115.77 1154.13 960.58 193.56 191922.22
4 191922.22 1154.13 959.61 194.52 191727.69
5 191727.69 1154.13 958.64 195.50 191532.20
6 191532.20 1154.13 957.66 196.47 191335.72
7 191335.72 1154.13 956.68 197.46 191138.27
8 191138.27 1154.13 955.69 198.44 190939.82
9 190939.82 1154.13 954.70 199.44 190740.39
10 190740.39 1154.13 953.70 200.43 190539.95
11 190539.95 1154.13 952.70 201.43 190338.52
12 190338.52 1154.13 951.69 202.44 190136.08
13 190136.08 1154.13 950.68 203.45 189932.62
14 189932.62 1154.13 949.66 204.47 189728.15
15 189728.15 1154.13 948.64 205.49 189522.66
16 189522.66 1154.13 947.61 206.52 189316.14
17 189316.14 1154.13 946.58 207.55 189108.58
18 189108.58 1154.13 945.54 208.59 188899.99
19 188899.99 1154.13 944.50 209.63 188690.36
20 188690.36 1154.13 943.45 210.68 188479.67
21 188479.67 1154.13 942.40 211.74 188267.94
22 188267.94 1154.13 941.34 212.80 188055.14
23 188055.14 1154.13 940.28 213.86 187841.28
24 187841.28 1154.13 939.21 214.93 187626.35
25 187626.35 1154.13 938.13 216.00 187410.35
26 187410.35 1154.13 937.05 217.08 187193.27
27 187193.27 1154.13 935.97 218.17 186975.10
28 186975.10 1154.13 934.88 219.26 186755.84
29 186755.84 1154.13 933.78 220.36 186535.48
30 186535.48 1154.13 932.68 221.46 186314.03
31 186314.03 1154.13 931.57 222.56 186091.46
32 186091.46 1154.13 930.46 223.68 185867.78
33 185867.78 1154.13 929.34 224.80 185642.99
34 185642.99 1154.13 928.21 225.92 185417.07
35 185417.07 1154.13 927.09 227.05 185190.02
36 185190.02 1154.13 925.95 228.18 184961.83
37 184961.83 1154.13 924.81 229.33 184732.51
38 184732.51 1154.13 923.66 230.47 184502.04
39 184502.04 1154.13 922.51 231.62 184270.41
40 184270.41 1154.13 921.35 232.78 184037.63
41 184037.63 1154.13 920.19 233.95 183803.68
42 183803.68 1154.13 919.02 235.12 183568.57
43 183568.57 1154.13 917.84 236.29 183332.27
44 183332.27 1154.13 916.66 237.47 183094.80
45 183094.80 1154.13 915.47 238.66 182856.14
46 182856.14 1154.13 914.28 239.85 182616.29
47 182616.29 1154.13 913.08 241.05 182375.23
48 182375.23 1154.13 911.88 242.26 182132.97
49 182132.97 1154.13 910.66 243.47 181889.50
50 181889.50 1154.13 909.45 244.69 181644.82
51 181644.82 1154.13 908.22 245.91 181398.91
52 181398.91 1154.13 906.99 247.14 181151.77
53 181151.77 1154.13 905.76 248.38 180903.39
54 180903.39 1154.13 904.52 249.62 180653.77
55 180653.77 1154.13 903.27 250.87 180402.91
56 180402.91 1154.13 902.01 252.12 180150.79
57 180150.79 1154.13 900.75 253.38 179897.41
58 179897.41 1154.13 899.49 254.65 179642.76
59 179642.76 1154.13 898.21 255.92 179386.84
60 179386.84 1154.13 896.93 257.20 179129.64
61 179129.64 1154.13 895.65 258.49 178871.15
62 178871.15 1154.13 894.36 259.78 178611.37
63 178611.37 1154.13 893.06 261.08 178350.29
64 178350.29 1154.13 891.75 262.38 178087.91
65 178087.91 1154.13 890.44 263.70 177824.21
66 177824.21 1154.13 889.12 265.01 177559.20
67 177559.20 1154.13 887.80 266.34 177292.86
68 177292.86 1154.13 886.46 267.67 177025.19
69 177025.19 1154.13 885.13 269.01 176756.18
70 176756.18 1154.13 883.78 270.35 176485.83
71 176485.83 1154.13 882.43 271.71 176214.12
72 176214.12 1154.13 881.07 273.06 175941.06
73 175941.06 1154.13 879.71 274.43 175666.63
74 175666.63 1154.13 878.33 275.80 175390.83
75 175390.83 1154.13 876.95 277.18 175113.65
76 175113.65 1154.13 875.57 278.57 174835.08
77 174835.08 1154.13 874.18 279.96 174555.12
78 174555.12 1154.13 872.78 281.36 174273.76
79 174273.76 1154.13 871.37 282.77 173991.00
80 173991.00 1154.13 869.95 284.18 173706.82
81 173706.82 1154.13 868.53 285.60 173421.22
82 173421.22 1154.13 867.11 287.03 173134.19
83 173134.19 1154.13 865.67 288.46 172845.72
84 172845.72 1154.13 864.23 289.91 172555.82
85 172555.82 1154.13 862.78 291.36 172264.46
86 172264.46 1154.13 861.32 292.81 171971.65
87 171971.65 1154.13 859.86 294.28 171677.37
88 171677.37 1154.13 858.39 295.75 171381.63
89 171381.63 1154.13 856.91 297.23 171084.40
90 171084.40 1154.13 855.42 298.71 170785.69
91 170785.69 1154.13 853.93 300.21 170485.48
92 170485.48 1154.13 852.43 301.71 170183.77
93 170183.77 1154.13 850.92 303.22 169880.56
94 169880.56 1154.13 849.40 304.73 169575.82
95 169575.82 1154.13 847.88 306.26 169269.57
96 169269.57 1154.13 846.35 307.79 168961.78
97 168961.78 1154.13 844.81 309.33 168652.46
98 168652.46 1154.13 843.26 310.87 168341.58
99 168341.58 1154.13 841.71 312.43 168029.16
100 168029.16 1154.13 840.15 313.99 167715.17
101 167715.17 1154.13 838.58 315.56 167399.61
102 167399.61 1154.13 837.00 317.14 167082.47
103 167082.47 1154.13 835.41 318.72 166763.75
104 166763.75 1154.13 833.82 320.32 166443.43
105 166443.43 1154.13 832.22 321.92 166121.52
106 166121.52 1154.13 830.61 323.53 165797.99
107 165797.99 1154.13 828.99 325.14 165472.84
108 165472.84 1154.13 827.36 326.77 165146.07
109 165146.07 1154.13 825.73 328.40 164817.67
110 164817.67 1154.13 824.09 330.05 164487.62
and so on

a. The monthly mortgage payment is $1154.13

b. The total monthly payment is $415488.51

c.The nominal APR is​ 13%

d.Over the​ 30-year period, the total amount of interest paid on the loan is $222988.51

e.The interest amount in the month 60 payment is $55877.72

f.The balance on the loan immediately after making the payment at the end of  month 60 is $179129.64

ekkarill92 answered 1 year ago
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