Question

In: Finance

You just found the house of your dreams. The price of the house is ​$500,000. You...

You just found the house of your dreams. The price of the house is

​$500,000.

You have been qualified to get a mortagage loan with AAA Bank. The mortgage loan is for

20 years at an annual interest rate of

24​%. A. How much are your monthly payments for the​ loan? B.What is the balance of the mortgage loan

after 2

​year(s) of​ payments? C. After

2

years of​ payments, you want to add extra money to the monthly payments so that you will be able to pay off the mortgage loan in

15

years. How much do you have to add to your previously computed monthly payments in order to accomplish​ this?

Solutions

Expert Solution

1: Monthly payment is computed using PMT function in excel

Price of house 500000
Term of loan 20 years
Interest rate 24%
a Monthly loan payment ($10,087.04)

2:

b Principal repayment after 2 years -2647.9413
Balance remaining 497352.059

3: First we compute the monthly payment required to pay off the loan in 15 years. Then we find the difference between old payment and new payment.

c PV of loan after 2 years 497352.059
Term of loan 15 years
Interest rate 24%
Monthly payment ($10,236.87)
Additional amount required $149.83

WORKINGS

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

You just found the house of your dreams. The price of the house is ​$500,000. You...
You just found the house of your dreams. The price of the house is ​$500,000. You have been qualified to get a mortgage loan with AAA Bank. The mortgage loan is for 30 years at an annual interest rate of 36%. Part​ (A): How much are your monthly payments for the​ loan? Part​ (B): What is the balance of the mortgage loan after 2 ​year(s) of​ payments? Part​ (C): After 2 years of​ payments, you want to add extra money...
You just found the house of your dreams. The price of the house is ​$400,000. You...
You just found the house of your dreams. The price of the house is ​$400,000. You have been qualified to get a mortagage loan with AAA Bank. The mortgage loan is for 30 years at an annual interest rate of 36​%. Part​ (A): How much are your monthly payments for the​ loan? Part​ (B): What is the balance of the mortgage loan after2 ​year(s) of​ payments? Part​ (C): After 2 years of​ payments, you want to add extra money to...
You have found your desired house for $500,000 and you like to purchase it. You approached...
You have found your desired house for $500,000 and you like to purchase it. You approached a mortgage company for loan. The company asked you that if you pay 20% down, you are able to get a 30 years loan for the remaining balance with interest rate of 4.75% with zero points. You accepted the deal. Assuming the mortgage is payable at the end of each month. Required: Develop an excel spread sheet and: On the first couple of lines...
Suppose that the house of your dreams costs $1,200,000. You manage to scrap a 20 percent...
Suppose that the house of your dreams costs $1,200,000. You manage to scrap a 20 percent down payment. You borrow the rest from a bank. The terms of the loan are: -30 years -4.5 percent -Monthly payments A) Find the amount of each monthly payment. B) Suppose you decide to sell the house after 12 years: -What is the loan balance at the end of 12 years? -What is the amount of your total payments over the 12 years? -What...
You have just signed a contract to purchase your first house. The price is $160,000 and...
You have just signed a contract to purchase your first house. The price is $160,000 and you have applied for a $100,000, 24-year, 4.6% loan. Annual property taxes are expected to be $5,509. Hazard Insurance costs $600 per year. Your car payment is $150, with 31 months left. Your monthly gross income is $4,225. What is your monthly payment of principal and interest? You have just signed a contract to purchase your first house. The price is $210,000 and you...
You own a house that is valued at $500,000. The probability of a house fire in...
You own a house that is valued at $500,000. The probability of a house fire in your area is 0.0002, and if a house fire happens, your home’s value will be reduced to $0. You are considering buying an insurance for your house. In case of fire, the insurance company will pay you $300,000. Ignore depreciation, taxes, etc. of your house in the following calculations. What is the expected values of your home without insurance and your home if the...
1. Peggy and John Schultz bought the house of their dreams seven years ago. The price...
1. Peggy and John Schultz bought the house of their dreams seven years ago. The price was $475,000, though they negotiated it down to a more agreeable $449,500. They paid 20% of that in cash, as a down payment and financed the rest using a 25-year, 4.15% mortgage. Peggy was doing bills the other day and decided to figure out just how much their monthly payment was and how much interest they had paid thus far. She also wants to...
You and your spouse are considering purchasing your first new house. The house price is $300,000....
You and your spouse are considering purchasing your first new house. The house price is $300,000. You will make 10% down payment. The remaining balance can be financed with a 30 year mortgage loan with an annual interest of 6%. A. What is the monthly mortgage payments? B. How much do you need if you are to pay off the loan after 5 years (right after the 60th payment)? C. How much interest (in $) will you save from paying...
Your dreams of becoming rich have just come true. You have won the State of​ Tranquility's...
Your dreams of becoming rich have just come true. You have won the State of​ Tranquility's Lottery. The State offers you two payment plans for the ​$6,000,000 advertised jackpot. You can take annual payments of $300,000 at the end of the year for the next 20 years or $2,945,444 today. a.  If your investment rate over the next 20 years is 9​%, which payoff will you​ choose? b. If your investment rate over the next 20 years is 6​%, which...
You found your dream house. It will cost you $200000 and you will put down $35000...
You found your dream house. It will cost you $200000 and you will put down $35000 as a down payment. For the rest you get a 30-year 5.5% mortgage. What will be your monthly mortgage payment in $ (assume no early repayment)? Your Answer: Question 11 options: Answer Hide hint for Question 11 Mortgage monthly payment N=30 years*12 month each year=360 I/Y=monthly interest rate= annual interest rate/12 PV= house price- down payment (money you will need to borrow from the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT