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When a mortgage is for 15 years at a 4.5% interest and the amount borrowed is...

When a mortgage is for 15 years at a 4.5% interest and the amount borrowed is $200,000 and closing costs are 4% of the new mortgage paid at closing by the buyer what is the...a) monthly mortgage principal and interest payment. b) balance of the mortgage after 5 years? c) total interest paid on the mortgage over ther 15 years? d) what is the first year's total mortgage interest tax deduction, if this is a home? e) what are the closing costs at the time of purchase? f) what is the APR for this mortgage?

Solutions

Expert Solution

amortization
loan amount 200000 pv
rate 4.500%
life 180 periods
( a )monthly instalment 1529.987 use financial formula "PMT"
(nper=180, rate=4.5%/12, pv-200000)
amortization schedule
A B C A*4.5%/12
loan instalment principle interest OUTSTANDING LOAN
1 200000.00 1529.99 779.99 750.00 199220.01
2 199220.01 1529.99 782.91 747.08 198437.10
198437.10 1529.99 785.85 744.14 197651.25
197651.25 1529.99 788.79 741.19 196862.46
196862.46 1529.99 791.75 738.23 196070.71
196070.71 1529.99 794.72 735.27 195275.98
195275.98 1529.99 797.70 732.28 194478.28
194478.28 1529.99 800.69 729.29 193677.59
193677.59 1529.99 803.70 726.29 192873.89
10 192873.89 1529.99 806.71 723.28 192067.18
192067.18 1529.99 809.74 720.25 191257.45
191257.45 1529.99 812.77 717.22 190444.68
190444.68 1529.99 815.82 714.17 189628.86
189628.86 1529.99 818.88 711.11 188809.98
188809.98 1529.99 821.95 708.04 187988.03
187988.03 1529.99 825.03 704.96 187163.00
187163.00 1529.99 828.13 701.86 186334.87
186334.87 1529.99 831.23 698.76 185503.64
185503.64 1529.99 834.35 695.64 184669.29
20 184669.29 1529.99 837.48 692.51 183831.81
183831.81 1529.99 840.62 689.37 182991.20
182991.20 1529.99 843.77 686.22 182147.43
182147.43 1529.99 846.93 683.05 181300.49
181300.49 1529.99 850.11 679.88 180450.38
180450.38 1529.99 853.30 676.69 179597.08
179597.08 1529.99 856.50 673.49 178740.59
178740.59 1529.99 859.71 670.28 177880.88
177880.88 1529.99 862.93 667.05 177017.94
177017.94 1529.99 866.17 663.82 176151.77
30 176151.77 1529.99 869.42 660.57 175282.35
175282.35 1529.99 872.68 657.31 174409.68
174409.68 1529.99 875.95 654.04 173533.73
173533.73 1529.99 879.24 650.75 172654.49
172654.49 1529.99 882.53 647.45 171771.96
171771.96 1529.99 885.84 644.14 170886.12
170886.12 1529.99 889.16 640.82 169996.95
169996.95 1529.99 892.50 637.49 169104.45
169104.45 1529.99 895.85 634.14 168208.61
168208.61 1529.99 899.20 630.78 167309.40
40 167309.40 1529.99 902.58 627.41 166406.83
166406.83 1529.99 905.96 624.03 165500.86
165500.86 1529.99 909.36 620.63 164591.51
164591.51 1529.99 912.77 617.22 163678.74
163678.74 1529.99 916.19 613.80 162762.55
162762.55 1529.99 919.63 610.36 161842.92
161842.92 1529.99 923.08 606.91 160919.84
160919.84 1529.99 926.54 603.45 159993.30
159993.30 1529.99 930.01 599.97 159063.29
159063.29 1529.99 933.50 596.49 158129.79
50 158129.79 1529.99 937.00 592.99 157192.79
157192.79 1529.99 940.51 589.47 156252.28
156252.28 1529.99 944.04 585.95 155308.24
155308.24 1529.99 947.58 582.41 154360.66
154360.66 1529.99 951.13 578.85 153409.52
153409.52 1529.99 954.70 575.29 152454.82
152454.82 1529.99 958.28 571.71 151496.54
151496.54 1529.99 961.87 568.11 150534.66
150534.66 1529.99 965.48 564.50 149569.18
149569.18 1529.99 969.10 560.88 148600.08
60 148600.08 1529.99 972.74 557.25 147627.34

(b) 147627.34 : BALANCE OF MORTGAGE AFTER 5 YEARS

(c ) TOTAL INTEREST PAID ON MORTGAGE OVER 15 YEARS

= (1529.99 X 180) - 250000 = 25398.2

(d) INTEREST IS TAX DEDCUTIBLE EXPENSES

SO FIRST YEAR, INTEREST ALLOWED FOR TAX DEDUCTION IS = 8804.52 (CHECK ABOVE TABLE)

(e)

CALCULATION OF APR
STEP 1 CALCULATE AMOUNT OF INSTALMENT
LOAN 250000
RATE 4.50%
YEAR 180
PMT 1529.99 INSTALMENT
STEP 2 NOW
LOAN 250000
CHARGES 10000 4% OF LOAN
EFFECTIVE LOAN 240000
AMOUNT
NOW USE THE ABOVE LOAN AMOUNT WITH INSTALMENT
CALCULATED EARLIER , FIND RATE
RATE 0.15575% APR

Go through it, Any doubts, please feel free to ask, Give positive feedback, Thank you

jeff jeffy answered 1 year ago
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