you want to ourchase a house that is priced at $85000. you can get a loan for 80
ID: 2613233 • Letter: Y
Question
you want to ourchase a house that is priced at $85000. you can get a loan for 80 percent of the banks appraised value at 15 1/4 percent for 30 years with monthly amortization. The banks appraiser has a theory that the value of a house is 95 percent of the asking price and appraises it accordingly . What will be your monthly payment if you take the loan?
set up an amortization schedule for years 1-5 for this problem showing annual mortgage payment amounts, yearly mortgage balances, principal, and interest for each year (total)
Explanation / Answer
purchase price of the building =$85,000.
Appraised value=$85,000 *95% =$80,750
Loan amount that can be given by the bank =80% of the appraised value =$80,750 * 80% =$64,600
Interest rate =15.25%
Monthly interest rate=15.25%/12 =1.2708333% =rate
Number of montly payments =12* 30 years i.e., tenor. =360.
Substituting the values in the formula EMI =$829.76.
Amortization schedule is as follows:
Values for columns 3 is nothing but the principal amount outstanding at the end of 12 months, 244, 36,48 and 60 months respectively from the below table.
Values for column 4 is arrived by summing up the amounts in column B below for each 12 months and values for column 5 is arrived by summing up the amounts in columns in Column C below for each 12 months.
Monthly ammortization schedule as below:
EMI can be calculated by using the excel formula PMT(rate,nper,pv)
Year Annual mortage payment amounts =829.76*12 Yearly mortagage balances Principal interest 1 $9,957.12 $64,486.68 $113.32 $9,843.80 2 $9,957.12 $64,354.81 $131.87 $9,825.25 3 $9,957.12 $64,201.37 $153.44 $9,803.68 4 $9,957.12 $64,022.82 $178.55 $9,778.57 5 $9,957.12 $63,815.05 $207.77 $9,749.35Related Questions
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