You are interested in purchasing the Malibu home (sale price of $12,000,000, mortgage rate of 3.955%,...

You are interested in purchasing the Malibu home (sale price of $12,000,000, mortgage rate of 3.955%, 30% down payment, 30 year fixed mortgage). How much principal would you pay [ Select ] ["$25,646", "$12,240", "$25,158", "$12,816"] during month 2? How much would your monthly payment go up today [ Select ] ["$4,428", "$4,977", "$10,428", "$3,428"] if interest rates went up 1% annually today?

Solutions

Expert Solution

Given, Price =$12,000,000 and Down payment= 30%.

Therefore, Loan amount= Price*(1- Down payment)= $12,000,000*0.7= $8,400,000

Monthly payment of the loan with interest at 3.955% = $ 39,885.27 as follows:

Principal paid in 2^nd month= $12,240.48 as shown in the relevant portion of amortization schedule below:

The answer is second option given.

If interest rate went up 1%, monthly payments will be $ 44,862.28 as follows:

Increase in monthly payments= 44,862.28- 39,885.27 = $ 4,977.01

The answer is second option given.

jeff jeffy answered 1 year ago

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