You take out a 30-year $450,000 mortgage loan with an APR of 7.75 percent and monthly...

You take out a 30-year $450,000 mortgage loan with an APR of 7.75 percent and monthly payments. In 16 years, you decide to sell your house and payoff the mortgage. What is your monthly payment? What is the principal balance on the loan? What is your total payment? What is your principal payment? What is your interest payment?

Solutions

Expert Solution

APR = 7.75 % p.a.

Effective interest rate period = Monthly

Efective Interest rate / Month = 7.75% / 12 = 0.6465%/ month

Total number of payments = 30 x 12 = 360 ( 12 payments / year)

Assuming monthly payment = M

4,50,000 = M x [ 1 - (1+0.6465%)^-360]/0.6465%

450,000 = M x 139.5844

M = 450,000/139,5844 = 3223.86 ( Monthly payment)

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Principla Amount = 4,50,000 which is fixed. However this balance amount is changing after each period.

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Total payment = 3223.86 x 360 = 11,60,587.84

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Principle payment = 450,000

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Interest pament = 11,60,587.84 - 450,000 = 7,10,587.84

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Please provide feedback on final ans.........Plz get back for question, clarification...........All the best

jeff jeffy answered 1 year ago

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