Question

1. Jasmine and her husband are considering trading up their home by selling their current house and buying a new house at a price of $250,000. They plan to sell their current house for $120,000 and use the money for a down payment. They will take out a mortgage to cover the remaining balance. The interest rate for such a mortgage amortized over a 20-year period is 7.75%, compounded monthly. (Note that the Canadian mortgages are calculated differently than other types of loans. Here we will treat it like a loan. If you take Fin2360, you will see how to make adjustments for the Canadian mortgage law).
   1. What will Jasmine’s monthly mortgage loan payment be?
   2. What will be the total interest that Jasmine and her husband will pay over the 20-year life of the loan?
   3. How much of her 1^st payment is towards interest, and how much is applied against the principal of the mortgage loan?
   4. Use Excel to construct an amortization table for the first 3 payments, and print out the table with your name and ID.   You can also do this by hand.
   5. How much does she still owe after making five years of payment?
   6. How much of the 61^st payment is towards interest, and how much is applied against the principal of the mortgage loan?

Answer 1

1.
1067.23

2.

126135.95

3.

Interest=839.58

Principal=227.65

4.

Payment	Loan beginning balance	Payment	Interest payment	Principal payment	Loan ending balance
1	130000	$1,067.23	$839.58	$227.65	$1,29,772.35
2	$1,29,772.35	$1,067.23	$838.11	$229.12	$1,29,543.23
3	$1,29,543.23	$1,067.23	$836.63	$230.60	$1,29,312.63

5.

113381.56

6.

Interest=732.26
Principal=334.98