You have just sold your house for 900,000 in cash. Your mortgage was originally

Question

You have just sold your house for 900,000 in cash. Your mortgage was originally a? 30-year mortgage with monthly payments and an initial balance of $750,000.The mortgage is currently exactly? 18½ years? old, and you have just made a payment. If the interest rate on the mortgage is 6.25%? (APR), how much cash will you have from the sale once you pay off the? mortgage? ?(Note: Be careful not to round any intermediate steps less than six decimal? places.)

(can you show solution on a financial calculator if possible)

Explanation / Answer

1) The monthly payments to be made on the loan of $750000 = 750000*((0.0625/12)*(1+0.0625/12)^360)/((1+0.0625/12)^360-1)) = $          4,617.88 2) The balance outstanding on the mortage is the PV of the remaining installments on the loan; ie: 11.5*12 = 138 months (installments). Hence, balance outstanding = 4617.88*((1+0.0625/12)^138-1))/((0.0625/12)*(1+0.0625/12)^138) = $    4,53,715.81 3) Cash available after paying the mortgage = 900000-453715.81 = $    4,46,284.19

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