Question

In: Finance

Youplan to purchase an $110,000 house using a 15-year mortgageobtained from your local bank....

You plan to purchase an $110,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate offered to you is 4.25 percent. You will make a down payment of 12 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 100th payment.
c. Calculate the amount of interest and, separately, principal paid in the 115th payment.
d. Calculate the amount of interest paid over the life of this mortgage.
  

Solutions

Expert Solution

a) Down payment = $110000 *12% = $13200

Amount financed by mortgage =$110000 - $13200 = $96800

Monthly rate =4.25%/12 =0.003542

No of months =15*12 =180

So, Monthly mortgage payment (A) is given by

A/0.003542*(1-1/1.003542^180) = 96800

=> 132.9295*A =96800

=> A = $728.21

b) Principal remaining after 99th payment (81 payments remaining)

= 728.21/0.003542*(1-1/1.003542^81)

=$51200.00

So, interest paid in 100th payment = $51200*0.003542 = $181.33

Principal paid in 100th payment = $728.21- $181.33 = $546.87

c)

Principal remaining after 114th payment (66 payments remaining)

= 728.21/0.003542*(1-1/1.003542^66)

=$42790.39

So, interest paid in 115th payment = $42790.39*0.003542 = $151.55

Principal paid in 115th payment = $728.21- $151.55 = $576.66

d) Total Amount paid over the life of mortgage = $728.21*180 = $131076.99

So, Total Interest paid = $131076.99- $96800 = $34276.99


Related Solutions

You plan to purchase an $80,000 house using a 15-year mortgage obtained from your local bank....
You plan to purchase an $80,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate offered to you is 8.00 percent. You will make a down payment of 20 percent of the purchase price. Calculate your monthly payments on this mortgage. Calculate the amount of interest and, separately, principal paid in the 4th payment. Calculate the amount of interest paid over the life of this mortgage. (use bank rate.com, mortgage amortization table What will be your...
You plan to purchase an $120,000 house using a 15-year mortgage obtained from your local bank....
You plan to purchase an $120,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate offered to you is 8.00 percent. You will make a down payment of 20 percent of the purchase price. Calculate the amount of interest and, separately, principal paid in the 120th payment 305.72 and 611.71 3057.20 and 6117.10 318.46 and 637.20 7926.90 and 73.11
You plan to purchase an $80,000 house using a 15-year mortgage obtained from your local bank....
You plan to purchase an $80,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate offered to you is 8.00 percent. You will make a down payment of 20 percent of the purchase price. Calculate your monthly payments on this mortgage. Calculate the amount of interest and, separately, principal paid in the 4th payment. Calculate the amount of interest paid over the life of this mortgage.
You plan to purchase an $100,000 house using a 15-year mortgage obtained from your local bank....
You plan to purchase an $100,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate offered to you is 4.5 percent. You will make a down payment of 10 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 80th payment. c. Calculate the amount of interest and, separately, principal paid in the 110th payment. d. Calculate the amount of interest...
You plan to purchase a $220,000 house using a 15-year mortgageobtained from your bank. The...
You plan to purchase a $220,000 house using a 15-year mortgage obtained from your bank. The mortgage rate offered to you is 4.75 percent. You will make a down payment of 20 percent of the purchase price.Monthly payments ______ ( Round your answer to 2 decimal places)Total interest is paid on this mortgage _________ ( Round your answer to 2 decimal places )
You plan to purchase a house for $175,000 using a 15-year mortgage obtained from your local...
You plan to purchase a house for $175,000 using a 15-year mortgage obtained from your local bank. You will make a down payment of 25 percent of the purchase price. You will not pay off the mortgage early. (LG 7-3) a. Your bank offers you the following two options for payment: Option 1: Mortgage rate of 5 percent and zero points. Option 2: Mortgage rate of 4.75 percent and 2 points. Which option should you choose? b. Your bank offers...
You plan to purchase a house for $200,000 using a 15-year mortgage obtained from your local...
You plan to purchase a house for $200,000 using a 15-year mortgage obtained from your local bank. You will make a down payment of 10 percent of the purchase price. You will not pay off the mortgage early. Assume the homeowner will remain in the house for the full term and ignore taxes in your analysis. a. Your bank offers you the following two options for payment. Which option should you choose? Option 1: Mortgage rate of 6.25 percent and...
You plan to purchase a house for $247,000 using a 15-year mortgage obtained from your local...
You plan to purchase a house for $247,000 using a 15-year mortgage obtained from your local bank. You will make a down payment of 20 percent of the purchase price. You will not pay off the mortgage early. Assume the homeowner will remain in the house for the full term and ignore taxes in your analysis. a. Your bank offers you the following two options for payment. Which option should you choose? Option 1: Mortgage rate of 6.8 percent and...
You plan to purchase a house for $127,000 using a 15-year mortgage obtained from your local...
You plan to purchase a house for $127,000 using a 15-year mortgage obtained from your local bank. You will make a down payment of 10 percent of the purchase price. You will not pay off the mortgage early. Assume the homeowner will remain in the house for the full term and ignore taxes in your analysis. a. Your bank offers you the following two options for payment. Which option should you choose? Option 1: Mortgage rate of 5.75 percent and...
You plan to purchase a $250,000 house using a 15-year mortgage obtained from your bank. The...
You plan to purchase a $250,000 house using a 15-year mortgage obtained from your bank. The mortgage rate offered to you is 5.00 percent. You will make a down payment of 20 percent of the purchase price. a. Calculate your monthly payments on this mortgage. b. Construct the amortization schedule for the mortgage. How much total interest is paid on this mortgage?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT