In: Finance
You plan to buy a house for $210,000. You have been offered a 20 year mortgage with a rate of 4.8%. You make a $30,000 down payment. Closing costs are 5%.
In the Amortization schedule for the first month, the interest, in dollars and cents, will be $_____
In the Amortization schedule for the first month, payment on principal, in dollars and cents, will be $______
In the Amortization schedule for the first month, the balance on the loan at the end of the first month, in dollars and cents, will be $______
Loan amount = cost of house - down payment (It is assumed that closing costs are payed separately and not added to the loan))
Loan amount = $210,000 - $30,000 = $180,000
Monthly loan payment is calculated using PMT function in Excel :
rate = 4.8% / 12 (converting annual rate into monthly rate)
nper = 20*12 (20 year loan with 12 monthly payments each year)
pv = 180000 (loan amount)
PMT is calculated to be $1,168.12
Interest = principal outstanding at beginning of month * 4.8% / 12
Interest = $180,000 * 4.8% / 12 = $720.00
Principal portion of monthly payment = monthly payment minus interest portion of payment
Principal portion of monthly payment = $1,168.12 - $720.00 = $448.12
principal outstanding at end of month = principal outstanding at beginning of month minus principal portion of monthly payment
principal outstanding at end of month = $180,000 - $448.12 = $179,551.88
In the Amortization schedule for the first month, the interest, in dollars and cents, will be $720.00
In the Amortization schedule for the first month, payment on principal, in dollars and cents, will be $448.12
In the Amortization schedule for the first month, the balance on the loan at the end of the first month, in dollars and cents, will be $179,551.88