You purchase a house that costs $625,000 with a 8%, 30-year mortgage. In order t
ID: 2612921 • Letter: Y
Question
You purchase a house that costs $625,000 with a 8%, 30-year mortgage. In order to avoid PMI insurance, you decide to follow a conforming mortgage by making a down payment of 20%. 1. What is your monthly payment? 2. Amortize the first and second payments. 3. What is the mortgage balance after 5 years? 4. What percentage of the principal is paid off after 5 years? 5. Suppose after 5 years you refinance at 6% the remaining balance at a cost of $10,000, for 30 years. What is your new monthly payment? 6. Further, suppose you maintain the same payments as in (1), i.e. pre-pay on the principal, how many YEARS until you pay off the mortgage?
Explanation / Answer
Loan amount = 625000*80%
= 500,000
Monthly payment = $ 3,668.82
Mortgage balance at the end of 60 period that is 5 years = $ 475,349.28
4) Percentage of principal paid
= $ 500,000 - 475,349.28 / 500,000
= 4.93%
5) New loan refinanced
475,349.28 + 10,000 ( 10,000 would also be capitalised)
Total loan = 485,349.28
New monthly payment = 2909.
At the payment of 3,668 loan amount of $ 485,349 it will take 218 months or 218/12 18.2 months approx
Enter Values Loan Summary Loan Amount $ 500,000.00 Scheduled Payment $ 3,668.82 500000 Annual Interest Rate 8.00 % Scheduled Number of Payments 360 Loan Period in Years 30 Actual Number of Payments 360 Number of Payments Per Year 12 Total Early Payments $ - Start Date of Loan 1/1/2015 Total Interest $ 820,776.23 Optional Extra Payments $ - Lender Name: PmtNo. Payment Date Beginning Balance Scheduled Payment Extra Payment Total Payment Principal Interest Ending Balance Cumulative Interest 1 2/1/2015 $ 500,000.00 $ 3,668.82 $ - $ 3,668.82 $ 335.49 $ 3,333.33 $ 499,664.51 $ 3,333.33 2 3/1/2015 499,664.51 3,668.82 - 3,668.82 337.73 3,331.10 499,326.78 6,664.43 3 4/1/2015 499,326.78 3,668.82 - 3,668.82 339.98 3,328.85 498,986.81 9,993.28 4 5/1/2015 498,986.81 3,668.82 - 3,668.82 342.24 3,326.58 498,644.56 13,319.85 5 6/1/2015 498,644.56 3,668.82 - 3,668.82 344.53 3,324.30 498,300.04 16,644.15 6 7/1/2015 498,300.04 3,668.82 - 3,668.82 346.82 3,322.00 497,953.21 19,966.15 7 8/1/2015 497,953.21 3,668.82 - 3,668.82 349.13 3,319.69 497,604.08 23,285.84 8 9/1/2015 497,604.08 3,668.82 - 3,668.82 351.46 3,317.36 497,252.62 26,603.20 9 10/1/2015 497,252.62 3,668.82 - 3,668.82 353.81 3,315.02 496,898.81 29,918.22 10 11/1/2015 496,898.81 3,668.82 - 3,668.82 356.16 3,312.66 496,542.65 33,230.88 11 12/1/2015 496,542.65 3,668.82 - 3,668.82 358.54 3,310.28 496,184.11 36,541.16 12 1/1/2016 496,184.11 3,668.82 - 3,668.82 360.93 3,307.89 495,823.18 39,849.05 13 2/1/2016 495,823.18 3,668.82 - 3,668.82 363.34 3,305.49 495,459.85 43,154.54 14 3/1/2016 495,459.85 3,668.82 - 3,668.82 365.76 3,303.07 495,094.09 46,457.61Related Questions
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