You want to buy a $252,000 home. You plan to pay 10% as a down payment,...

You want to buy a $252,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan for the rest.

a) How much is the loan amount going to be?

$

b) What will your monthly payments be if the interest rate is 6%?

$

c) What will your monthly payments be if the interest rate is 7%?

$

Expert Solution

a) loan amount = house value*(1-downpayment %age) = 252000*(1-0.1) = 226800

b)

	Monthly rate(M)=	yearly rate/12=	0.50%	Monthly payment=	1356.66
Month	Beginning balance (A)	Monthly payment	Interest = M*A	Principal paid	Ending balance
1	226800.00	1356.66	1134.00	222.66	226577.34
2	226577.34	1356.66	1132.89	223.77	226353.57
3	226353.57	1356.66	1131.77	224.89	226128.67
4	226128.67	1356.66	1130.64	226.02	225902.66
5	225902.66	1356.66	1129.51	227.15	225675.51
6	225675.51	1356.66	1128.38	228.28	225447.23
7	225447.23	1356.66	1127.24	229.42	225217.80
8	225217.80	1356.66	1126.09	230.57	224987.23
9	224987.23	1356.66	1124.94	231.72	224755.51
10	224755.51	1356.66	1123.78	232.88	224522.62
11	224522.62	1356.66	1122.61	234.05	224288.57
12	224288.57	1356.66	1121.44	235.22	224053.36
13	224053.36	1356.66	1120.27	236.39	223816.96
14	223816.96	1356.66	1119.08	237.58	223579.39
15	223579.39	1356.66	1117.90	238.76	223340.62
16	223340.62	1356.66	1116.70	239.96	223100.67

Where

Interest paid = Beginning balance * Monthly interest rate

Principal = Monthly payment – interest paid

Ending balance = beginning balance – principal paid

Beginning balance = previous Month ending balance

c)

	Monthly rate(M)=	yearly rate/12=	0.58%	Monthly payment=	1505.16
Month	Beginning balance (A)	Monthly payment	Interest = M*A	Principal paid	Ending balance
1	226800.00	1505.16	1323.00	182.16	226617.84
2	226617.84	1505.16	1321.94	183.22	226434.62
3	226434.62	1505.16	1320.87	184.29	226250.34
4	226250.34	1505.16	1319.79	185.36	226064.97
5	226064.97	1505.16	1318.71	186.44	225878.53
6	225878.53	1505.16	1317.62	187.53	225690.99
7	225690.99	1505.16	1316.53	188.63	225502.37
8	225502.37	1505.16	1315.43	189.73	225312.64
9	225312.64	1505.16	1314.32	190.83	225121.81
10	225121.81	1505.16	1313.21	191.95	224929.86
11	224929.86	1505.16	1312.09	193.07	224736.80
12	224736.80	1505.16	1310.96	194.19	224542.60
13	224542.60	1505.16	1309.83	195.33	224347.28
14	224347.28	1505.16	1308.69	196.46	224150.81
15	224150.81	1505.16	1307.55	197.61	223953.20
16	223953.20	1505.16	1306.39	198.76	223754.44
17	223754.44	1505.16	1305.23	199.92	223554.52
18	223554.52	1505.16	1304.07	201.09	223353.43
19	223353.43	1505.16	1302.90	202.26	223151.17

Where

Interest paid = Beginning balance * Monthly interest rate

Principal = Monthly payment – interest paid

Ending balance = beginning balance – principal paid

Beginning balance = previous Month ending balance

jeff jeffy answered 1 year ago

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