Over the last ten years, the Gibsons have saved $250 at the end of the month at
ID: 2744500 • Letter: O
Question
Over the last ten years, the Gibsons have saved $250 at the end of the month at 1.1% compounded monthly for a down payment on a house. They used all the money down they have accumulated for the down payment on a home they bought for $256,000. For the remaining balance of the cost of the house, they took out a 30 year mortgage at 6.5%
a. How much money did they have for a down payment?
b. How much is the remaining balance?
c. What is their monthly payment?
d. What will be the total amount of their mortgage payments after the 30 years?
e. How much money will they have paid in interest over the lifetime of the loan?
Explanation / Answer
Down payment amount = Future value of annuity for 10 yrs = payment per period x (1+r/no of periods)^number of period x number of years - 1
r
= 61,740
Answer 2
Remaining balance = Loan amount - downpayment = 256000 - 61740 = 194260
Answer 3
Calculation of Monthly loan payment :
P = (A X r) / [1-(1+r)^-n]
P = Monthly loan amount
A = Loan Amount = 194260
r = rate of interest = 6.5/12
n = total number of payments = 360
P = (194260X.065/12) / [(1-(1+.065/12)^-360]
P = 1228
Answer 4
Total amount of mortgage = no of instalments x instalment amount = 1228 x 12 x 30 = 442080
Answer 5
Amount of interest paid = Total amount of mortgage - Loan amount
= 442080 - 194260
= 247820
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.