Question

You plan to purchase a $150,000 house using a 15-year mortgage obtained from your local credit union. The mortgage rate offered to you is 6.75 percent. You will make a down payment of 15 percent of the purchase price.

a. Calculate your monthly payments on this mortgage.
b. Calculate the amount of interest and, separately, principal paid in the 60th payment.
c. Calculate the amount of interest and, separately, principal paid in the 150th payment.
d. Calculate the amount of interest paid over the life of this mortgage.

Answer 1

a.	Monthly Payment	=-pmt(rate,nper,pv,fv)
		= $   1,128.26
	Where,
	rate	=	6.75%/12	=	0.005625
	nper	=	15*12	=	180
	pv	=	150000*(1-0.15)	=	$       1,27,500
	fv			=	0
b.	Interest paid	$       555.93
	Principal Paid	$       572.33
	Working:
	Balance of loan after 59th Payment	=pv(rate,nper,pmt,fv)
		= $ 98,832.14
	Where,
	rate			=	0.005625
	nper	=	180-59	=	121
	pmt			=	$     -1,128.26
	fv			=	0
	Interest paid	=	Loan value at beginning*monthly interest rate
		=	$ 98,832.14	*	0.005625
		=	$       555.93
	Principal Paid	=	Monthly Payment	-	Monthly Interest
		=	$   1,128.26	-	$           555.93
		=	$       572.33
c.	Interest paid	$      180.08
	Principal Paid	$       948.18
	Working:
	Balance of loan after 149th Payment	=pv(rate,nper,pmt,fv)
		= $ 32,014.02
	Where,
	rate			=	0.005625
	nper	=	180-149	=	31
	pmt			=	$     -1,128.26
	fv			=	0
	Interest paid	=	Loan value at beginning*monthly interest rate
		=	$ 32,014.02	*	0.005625
		=	$       180.08
	Principal Paid	=	Monthly Payment	-	Monthly Interest
		=	$   1,128.26	-	$           180.08
		=	$       948.18
d.	Interest paid	$ 75,586.72
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