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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 1 year ago
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