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The Frugals buy a home and assume a $190,000 30-year mortgage @ j (12) = 8...

The Frugals buy a home and assume a $190,000 30-year mortgage @ j (12) = 8 %.

They decide to amortize the debt quicker, and they pay an extra $400 toward

principal each month. How long will it take them to retire their mortgage?

Assuming the Frugals continue to pay down their mortgage at the rate calculated

just above, how much interest will they be able to write-off for income tax

purposes in the 7 th year of their loan? Show all of your work.

Solutions

Expert Solution

Time required to retire the mortgage= 184.24 Months or 15.35 years.

Interest will they be able to write-off for income tax purposes in the 7th year of loan= $11,745.77

Calculation of the time required and the relevant portion of amortization schedule showing interest during 7th year are given below.

jeff jeffy answered 2 years ago
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