You are buying a house for $350,000 with a 20% down payment. You use a 30-year...

You are buying a house for $350,000 with a 20% down payment. You use a 30-year monthly amortized mortgage at a 5.75% nominal interest rate. Monthly payments are &1,634. What is the estimated payoff on the mortgage after you have paid for 10 years?

Expert Solution

Loan amount = $350000*80% =
=280000
Present Value Of An Annuity
= C*[1-(1+i)^-n]/i]

Where,
C= Cash Flow per period
i = interest rate per period =5.75%/12 =0.479166667%
n=number of period =12*20 =240

= $1634[ 1-(1+0.00479166667)^-240 /0.00479166667]

= $1634[ 1-(1.00479166667)^-240 /0.00479166667]

= $1634[ (0.6825) ] /0.00479166667

= $2,32,735.85


Pay off =$280000-232735.85
=$47264.15

jeff jeffy answered 2 years ago

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