1.You are eligible for $1026 monthly payment on a 30 year 4.5% fixed rate mortga
ID: 2638000 • Letter: 1
Question
1.You are eligible for $1026 monthly payment on a 30 year 4.5% fixed rate mortgage. You are interested in a condo whose property taxes are $300 a month and homeowners insurance are $60 a month.
a.How much money can you borrow and what is your monthly payment ?
A.$126,455, $713
B.$129,488, $765
C.$131,442, $666
D.$136,267, $806
b.What is the interest and principle portions of your first payment
A.$333, $333
B.$466, $200
C.$493, $173
D.$500, $166
c.What is the principle balance of your mortgage after 15 years (180 payments)?
A.$87,059
B.$88,533
C.$93,125
D.$100,147
d.How much interest have you paid over the past 15 years (180 payments)?
A.$44,383
B.$49,321
C.$62,830
D.$75,497
e.If you increased your monthly payments by $50, how long would it take you to payoff your mortgage?
A.About 26 years
B.About 28 years
C.About 30 years
D.About 32 years
Explanation / Answer
So answer is c option
Principal paid = 666 - 493 = $173
So, answer is c option
(D) Interest for each month upto 15 years can be calculated using excel function IPMT
Total of all these interest is the interest paid in 15 years = 75497
So option d is answer
(C) Total money paid in 15 years = each installment*180 =666*180 = $119,880
Total princiapal paid in 15 years = total amount in 15 years - total interest paid in 15 years
= 119880 - 75497 = 44383
Balance principal left = Principal - principal paid
= 131,443 - 44383 = $87,060
So option A is answer
(E) New installment paid = 666+50 = $716
Number of periods can be calculated using excel formula nper(rate,installment,principal,0,0)
Number of periods will come 311.54
Number of years = 311.54/12 = 25.96 years
So option A is answer.
Thanks
(A) He will give $1026 and will get $300 plus $60. So, he will give net $(1026-300-60) Monthly payment (in $) 666 Number of years, n 30 Total Number of monthsin 30 years (12n) 360 Annual interest rat, r 4.50% Monthly interest rate (r/12) 0.375% Money he can borrow is the present value of all the installments he will pay PVA = A*[ {(1+r)^n - 1} / {r*(1+r)^n} ] Present Value of Annuity, PVA 131442.53So answer is c option
(B) Interest can be calculated using excel function IPMT(rate,per,nper,pv,fv,type) where per is the month for which interest is being calculated Here it comes like IPMT(0.375%,1,360,131443,0,0) So interest will come $493 And principal payment paid = total payment - interest paidPrincipal paid = 666 - 493 = $173
So, answer is c option
(D) Interest for each month upto 15 years can be calculated using excel function IPMT
Month Interest Paid Month Interest Paid Month Interest Paid Month Interest Paid Month Interest Paid 1 492.91 21 479.45 41 464.95 61 449.33 81 432.48 2 492.26 22 478.76 42 464.20 62 448.51 82 431.61 3 491.61 23 478.05 43 463.44 63 447.70 83 430.73 4 490.95 24 477.35 44 462.68 64 446.88 84 429.85 5 490.30 25 476.64 45 461.92 65 446.06 85 428.96 6 489.64 26 475.93 46 461.16 66 445.23 86 428.07 7 488.98 27 475.22 47 460.39 67 444.40 87 427.18 8 488.31 28 474.50 48 459.62 68 443.57 88 426.28 9 487.65 29 473.78 49 458.84 69 442.74 89 425.39 10 486.98 30 473.06 50 458.07 70 441.90 90 424.48 11 486.31 31 472.34 51 457.29 71 441.06 91 423.58 12 485.63 32 471.61 52 456.50 72 440.22 92 422.67 13 484.96 33 470.88 53 455.72 73 439.37 93 421.76 14 484.28 34 470.15 54 454.93 74 438.52 94 420.84 15 483.60 35 469.42 55 454.14 75 437.67 95 419.92 16 482.91 36 468.68 56 453.34 76 436.81 96 419.00 17 482.23 37 467.94 57 452.55 77 435.95 97 418.07 18 481.54 38 467.20 58 451.75 78 435.09 98 417.14 19 480.85 39 466.45 59 450.94 79 434.22 99 416.21 20 480.15 40 465.71 60 450.14 80 433.36 100 415.27 101 414.33 121 394.77 141 373.68 161 350.96 102 413.39 122 393.75 142 372.59 162 349.78 103 412.44 123 392.73 143 371.49 163 348.60 104 411.49 124 391.71 144 370.38 164 347.40 105 410.54 125 390.68 145 369.28 165 346.21 106 409.58 126 389.64 146 368.16 166 345.01 107 408.62 127 388.61 147 367.05 167 343.81 108 407.65 128 387.57 148 365.92 168 342.60 109 406.68 129 386.52 149 364.80 169 341.39 110 405.71 130 385.48 150 363.67 170 340.17 111 404.73 131 384.42 151 362.54 171 338.95 112 403.75 132 383.37 152 361.40 172 337.72 113 402.77 133 382.31 153 360.26 173 336.49 114 401.78 134 381.24 154 359.11 174 335.25 115 400.79 135 380.18 155 357.96 175 334.01 116 399.80 136 379.10 156 356.80 176 332.77 117 398.80 137 378.03 157 355.64 177 331.52 118 397.80 138 376.95 158 354.48 178 330.26 119 396.79 139 375.86 159 353.31 179 329.01 120 395.78 140 374.78 160 352.14 180 327.74Total of all these interest is the interest paid in 15 years = 75497
So option d is answer
(C) Total money paid in 15 years = each installment*180 =666*180 = $119,880
Total princiapal paid in 15 years = total amount in 15 years - total interest paid in 15 years
= 119880 - 75497 = 44383
Balance principal left = Principal - principal paid
= 131,443 - 44383 = $87,060
So option A is answer
(E) New installment paid = 666+50 = $716
Number of periods can be calculated using excel formula nper(rate,installment,principal,0,0)
Number of periods will come 311.54
Number of years = 311.54/12 = 25.96 years
So option A is answer.
Thanks
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