Question

You bought a house 8 years ago with a $250,000 mortgage. It was a 15 year loan with monthly payments which will pay off the loan when you make the last payment. The interest rate was 6%. What are your monthly payment and your current loan balance? How much interest will you pay in the upcoming year?

 

 

Answer 1

Data:	Loan Amount	$250,000
	Interest rate	6%
	No of Years	15
	Months	12

Year	Loan Payment		Interest	Payment	Balance
1	$25,315.70		$15,000.00	$10,315.70	$239,684.30
2	$25,315.70		$14,381.06	$10,935	$228,749.65
3	$25,315.70		$13,724.98	$11,590.73	$217,158.92
4	$25,315.70		$13,029.54	$12,286.17	$204,872.75
5	$25,315.70		$12,292.37	$13,023.34	$191,849.41
6	$25,315.70		$11,510.96	$13,804.74	$178,044.67
7	$25,315.70		$10,682.68	$14,633.02	$163,411.65
8	$25,315.70		$9,804.70	$15,511.01	$147,900.64

a) Monthly Payments		$2,109.64
		PMT(6%/12, 15*12, -250000)

 

b) Current Loan Balance

Years	Monthly Pay.	Rate	Loan Balance
8	$2,109.64	6%	$144,411.42	FV(6%/12, 8*12, 2109.64, -250000)

 

C) Interest to pay in coming years

Remaining years	Monthly payment	Loan Balance	Interest left
7.00	$2,109.64	$144,411.42	$4,685.50

First we will find payment left for the remianing seven years
Step 1: Multiply monthly payment by 12 to arrive at an annual payment (2109.64*12)						$25,315.70
Step 2: Multiply annual payment of $25,315.70 by 7 to arrive at annual interest payment for 7 years							$177,209.93
Step 3: Minus the current loan balance of 144,411.42 from 177,209.93 to get						$32,798.52
Step 4: Now divide 32,798.52 by 7 to attain interest to pay in the upcoming years						$4,685.50

 

$4,685.50