Question

when paying off a home mortgage, extra principal payments may have a dramatic impact on the time needed to pay off the mortgage. Create an amortization schedule for a $200,000 thirty-year mortgage with a 6% APR. After the fifth year, add an extra $100 to each monthly payment. When is the loan paid off?

Answer 1

Answer:

The mortgage payment of $1,199.10 is paid till the 5^th year or till the 60^th payment. Starting from the 61^st payment to the rest of the period, the mortgage payments are $1,299.10 which is an increase of $100 from the current mortgage payment of $ $1,199.10.

At the end of 312^th payment or 26^th year, the payment due is $770.69 and the loan is paid off at the end of 313^th payment or 26 years or 1 month which makes the amount due to be negative at the end of 313^th payment.

Hence, the loan is paid off in 26 years and 1 month.

Dear student, please "UPVOTE" the solution. Thank you :)