Question

You would like to buy a house that costs

$ 350 comma 000$350,000.

You have

$ 50 comma 000$50,000

in cash that you can put down on the​ house, but you need to borrow the rest of the purchase price. The bank is offering you a​ 30-year mortgage that requires annual payments and has an interest rate of

9 %9%

per year. You can afford to pay only

$ 27 comma 740$27,740

per year. The bank agrees to allow you to pay this amount each​ year, yet still borrow

$ 300 comma 000$300,000.

At the end of the mortgage​ (in 30​ years), you must make a balloon​ payment; that​ is, you must repay the remaining balance on the mortgage. How much will be this balloon​ payment?

Answer 1

House Cost : $350,000

Down Payment : $50,000

Rate of Interest : 9% PA

Yearly fixed payment : $27,740

Amortization schedule :

Year	Opening balance	Interest @ 9% PA	Principal repayment	Total Payment (Annual)	Closing balance
1	$3,00,000	$27,000	$740	$27,740	$2,99,260
2	$2,99,260	$26,933	$807	$27,740	$2,98,453
3	$2,98,453	$26,861	$879	$27,740	$2,97,574
4	$2,97,574	$26,782	$958	$27,740	$2,96,616
5	$2,96,616	$26,695	$1,045	$27,740	$2,95,571
6	$2,95,571	$26,601	$1,139	$27,740	$2,94,433
7	$2,94,433	$26,499	$1,241	$27,740	$2,93,192
8	$2,93,192	$26,387	$1,353	$27,740	$2,91,839
9	$2,91,839	$26,266	$1,474	$27,740	$2,90,364
10	$2,90,364	$26,133	$1,607	$27,740	$2,88,757
11	$2,88,757	$25,988	$1,752	$27,740	$2,87,005
12	$2,87,005	$25,830	$1,910	$27,740	$2,85,096
13	$2,85,096	$25,659	$2,081	$27,740	$2,83,014
14	$2,83,014	$25,471	$2,269	$27,740	$2,80,746
15	$2,80,746	$25,267	$2,473	$27,740	$2,78,273
16	$2,78,273	$25,045	$2,695	$27,740	$2,75,577
17	$2,75,577	$24,802	$2,938	$27,740	$2,72,639
18	$2,72,639	$24,538	$3,202	$27,740	$2,69,437
19	$2,69,437	$24,249	$3,491	$27,740	$2,65,946
20	$2,65,946	$23,935	$3,805	$27,740	$2,62,142
21	$2,62,142	$23,593	$4,147	$27,740	$2,57,994
22	$2,57,994	$23,219	$4,521	$27,740	$2,53,474
23	$2,53,474	$22,813	$4,927	$27,740	$2,48,546
24	$2,48,546	$22,369	$5,371	$27,740	$2,43,176
25	$2,43,176	$21,886	$5,854	$27,740	$2,37,321
26	$2,37,321	$21,359	$6,381	$27,740	$2,30,940
27	$2,30,940	$20,785	$6,955	$27,740	$2,23,985
28	$2,23,985	$20,159	$7,581	$27,740	$2,16,404
29	$2,16,404	$19,476	$8,264	$27,740	$2,08,140
30	$2,08,140	$18,733	$9,007	$27,740	$1,99,132

Balloon Payment : $1,99,132