Freddy and Frieda Finance are looking to buy a house. They find a house that they...

1. Nautical Bank offers a 30-year fixed rate mortgage with a nominal annual rate of 3.125%. What would be the Finances’ monthly payment under this loan?

2. Construct an amortization schedule for the 30-year Nautical Bank loan in #1 (see section 5-18 of the textbook). What will be the Finance’s loan balance after 7 years of payments (after payment 84)?

3. Bank of United States offers a 15-year fixed rate mortgage with a nominal annual rate of 2.5%. What would be the Finance’s monthly payment under this loan?

4. Construct an amortization schedule for the 15-year Bank of United States loan in #3 (see section 5-18 of the textbook). What will be the Finance’s loan balance after 7 years of payments (after payment 84)?

Solutions

Expert Solution

Part 1:

Monthly payment of Nautical Bank Loan= $ 1,285.13

Calculation as below:

Part 2:

Relevant portion of amortization schedule of Nautical Bank Loan is given below.

Loan balance after 84 payments= $252,756.62

Part 3:

Monthly payment of Bank of United States Loan= $ 2,000.37

Calculation as below:

Part 4:

Relevant portion of amortization schedule of Bank of United States Loan is given below.

Loan balance after 84 payments= $ 173,886.90

jeff jeffy answered 2 years ago

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