In: Finance
1) What will be your monthly payment on a $480,000 15 and a 30 yr mortgage if the rate is 3.50 % for people with good credit and 10.5% for people with bad credit 4 calculations? A) Also, how much interest will you pay over the life of the 4 loans you just calculated? (The mortgage is $480,000 (not the price of the house) you may have to adjust a bank rate.com default of 20% down) B) Why would someone finance a house with a 10 year interest only loan (site 3 reasons)?
(1)
(a) Mortgage = $ 480000, Tenure = 15 years or (15 x 12) = 180 months, Interest Rate = 3.5 %
Applcable Monthly Rate = 3.5 / 12 = 0.29167 %
Let the monthly repayments be $ A
Therefore, 480000 = A x (1/0.0029167) x [1-{1/(1.0029167)^(180)}]
480000 = A x 139.8827
A = 480000 / 139.8827 = $ 3431.46
(b) Mortgage = $ 480000, Tenure = 30 years or (30 x 12) = 360 months, Interest Rate = 3.5 %
Applcable Monthly Rate = 3.5 / 12 = 0.29167 %
Let the monthly repayments be $ B
Therefore, 480000 = B x (1/0.0029167) x [1-{1/(1.0029167)^(360)}]
480000 = B x 222.694
B = 480000 / 222.684 = $ 2155.42
(c)
Mortgage = $ 480000, Tenure = 15 years or (15 x 12) = 180 months, Interest Rate = 10.5 %
Applcable Monthly Rate = 10.5 / 12 = 0.0.875 %
Let the monthly repayments be $ C
Therefore, 480000 = C x (1/0.00875) x [1-{1/(1.00875)^(180)}]
480000 = C x 90.4651
C = 480000 / 90.4651 = $ 5305.91
(d)
Mortgage = $ 480000, Tenure = 30 years or (30 x 12) = 360 months, Interest Rate = 10.5 %
Applcable Monthly Rate = 10.5 / 12 = 0.0.875 %
Let the monthly repayments be $ D
Therefore, 480000 = D x (1/0.00875) x [1-{1/(1.00875)^(360)}]
480000 = D x 109.321
D = 480000 / 109.321 = $ 4390.75