You are buying your first condo for $220,000 and are making a $20,000 down payment. You...

You are buying your first condo for $220,000 and are making a $20,000 down payment. You have arranged to finance the remaining amount with a 30-year monthly payment amortized mortgage at a 5.75% nominal interest rate. What will your monthly payments be?

a. $1,167.15

b. $1,900.88

c. $1,200.93

d. $1,962.70

e. $1,324.02

f. $2,100.04

What is the estimated payoff on the mortgage question above after you have paid for 10 years? Show how you obtained the mortgage balance using Excel and the balance.

What is the first 12 months mortgage interest that you can deduct from your taxes according to IRS? Show how you obtained the mortgage interest deduction using Excel and the answer.

Expert Solution

After down payment of $20,000 loan amount= $220000-20000 = $200,000

Monthly payment= $1,167.15 using the PV function of Excel as follows:

The answer is option 1 given.

Estimated pay off after paying for 10 years= $166,240.30 calculated as the present value of future payments, using the PV function of Excel (as given above).

Interest for the first 12 months= $ 11,432.90 calculated using the CUMIPMT function of Excel (as given above).

jeff jeffy answered 2 years ago

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You are buying your first condo for $220,000 and are making a $20,000 down payment. You...

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