Question

3. Ann obtains a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $135,000 at 5.25%. How much does Ann need to pay monthly?

16. Ann obtains a 30 year Interest Only Fixed Rate Mortgage with monthly payments for $135,000 at 5.25%. What will Ann’s monthly payments be?

Answer 1

3. Ann obtains a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $135,000 at 5.25%. How much does Ann need to pay monthly?

Finding payment per period:
Asset Value = A	$135,000.00
Down Payment = DP = 0% =	$0.00
P = Principal Loan = (A - DP) =	$135,000.00
R = Rate = 5.25%/12 =	0.437500%
N = Numbers of payment =	360
PMT = Payment = P x R x (1+R)^N / ((1+R)^N - 1) =	745.47

Formula for calculating payment (working)

PMT = P x R x (1+R)^N / ((1+R)^N - 1)

PMT =135000*5.25%/12*(1+5.25%/12)^360/((1+5.25%/12)^360-1)

PMT = $ 745.47 (Rounding to nearest cent or two decimal places)

16. Ann obtains a 30 year Interest Only Fixed Rate Mortgage with monthly payments for $135,000 at 5.25%. What will Ann’s monthly payments be?

Asset Value = A	$135,000.00
Down Payment = DP = 0% =	$0.00
P = Principal Loan = (A - DP) =	$135,000.00
R = Rate = 5.25%/12 =	0.437500%
N = Numbers of payment =	360

Interest only monthly payment = P x R = $ 590.625