Question
In: Finance
Helen purchased a house for $450,000. She made a down payment of 30.00% of the value...
Helen purchased a house for $450,000. She made a down payment of 30.00% of the value of the house and received a mortgage for the rest of the amount at 3.92% compounded semi-annually amortized over 20 years. The interest rate was fixed for a 3 year period.
a. Calculate the monthly payment amount.
Round to the nearest cent
b. Calculate the principal balance at the end of the 3 year term.
Round to the nearest cent
c. Calculate the monthly payment amount if the mortgage was renewed for another 3 years at 6.92% compounded semi-annually?
Round to the nearest cent
Solutions
Expert Solution
Sol:
| Purchase price of house | 450000 |
| Down payment | 30% |
| Loan amount | 315000 |
| Interest rate | 3.92% |
| Effective interest rate | 3.96% |
| No of years | 20 |
| Periods in year | 12 |
| a) | |
| Monthly payments | $1,901.94 |
| b) | |
| Total years left | 17 |
| Principal balance after 3 years | $282,075.02 |
| c) | |
| Loan balance | $282,075.02 |
| Interest rate | 6.92% |
| Effective interest rate | 7.04% |
| No of years | 17 |
| Periods in year | 12 |
| Monthly payments | $2,374.93 |
a) Monthly payment amount = $1,902
b) principal balance at the end of the 3 year term = $282,075
c) Monthly payment amount if the mortgage was renewed for another 3 years = $2,375
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jeff jeffy answered 2 years agoRelated Solutions
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