I have a test on Monday and I\'m really confused on how to work these out. pleas

Question

I have a test on Monday and I'm really confused on how to work these out. please help!

Problems 1 - 13 relate to the following inf The lender requires a 10% down payment, and will finance the rest with a 30 year fixed rate mortgage with monthly payments at 9 7/8% with two discount points char You are purchasing a house for $95,000. 1. Payment: Calculate the monthly payment. [$742.44] 2. Balance: Calculate the balance of the loan after 2 years. [$84,473.95) 3. Balance: Calculate the balance of the loan after 3 years. [$83,880.09] 4. Principal: How much principal is paid back during the third year? [$593.86] 5. Interest: How much interest is paid during the third year? [8315.40] 6. Interest: How much interest is paid in the first month? [$703.59) Interest: How much interest is paid in the 37th month? [S690.26] S. Principal How much principal is paid during the first month? (538.84) 9. Principal: How much principal is paid during the 37th month? ($$2.17) 10. Interest How much interest is paid in the second year? [$8371.02]

Explanation / Answer

House Price $95,000 Down Payment $9,500 10%*95000 Loan Amount $85,500 (House Price - Down Payment) Interest Rate 9% + 7/8 7 divide 8 0.875 Interest Rate 9.875% Monthly Interest Rate 0.823% 9.875%/12 No of Payments 360 30*12 Using the below formula, we can calculate the monthly payments Monthly Payment = Loan Amount*(i*(1+i)*n)/(1+i)*n - 1) Monthly Payment = ($85500*(0.00823)*(1.00823)^360)/(1.00823)360 - 1 Solving the above we get, monthly payments at $ 742.44 Now we would prepare 40 months amortization table, to answer the remaining questions Payments Loan Beginning Balance Interest (Loan beginning balance*0.823%) Principal (Total Payments - Interest) Total Payments Loan Ending Balance 1 $85,500.00 $703.59 $38.85 $742.44 $85,461.15 2 $85,461.15 $703.27 $39.17 $742.44 $85,421.99 3 $85,421.99 $702.95 $39.49 $742.44 $85,382.50 4 $85,382.50 $702.63 $39.81 $742.44 $85,342.69 5 $85,342.69 $702.30 $40.14 $742.44 $85,302.55 6 $85,302.55 $701.97 $40.47 $742.44 $85,262.07 7 $85,262.07 $701.64 $40.80 $742.44 $85,221.27 8 $85,221.27 $701.30 $41.14 $742.44 $85,180.13 9 $85,180.13 $700.96 $41.48 $742.44 $85,138.65 10 $85,138.65 $700.62 $41.82 $742.44 $85,096.83 11 $85,096.83 $700.28 $42.16 $742.44 $85,054.67 12 $85,054.67 $699.93 $42.51 $742.44 $85,012.16 13 $85,012.16 $699.58 $42.86 $742.44 $84,969.30 14 $84,969.30 $699.23 $43.21 $742.44 $84,926.08 15 $84,926.08 $698.87 $43.57 $742.44 $84,882.51 16 $84,882.51 $698.51 $43.93 $742.44 $84,838.59 17 $84,838.59 $698.15 $44.29 $742.44 $84,794.30 18 $84,794.30 $697.79 $44.65 $742.44 $84,749.64 19 $84,749.64 $697.42 $45.02 $742.44 $84,704.62 20 $84,704.62 $697.05 $45.39 $742.44 $84,659.23 21 $84,659.23 $696.67 $45.77 $742.44 $84,613.47 22 $84,613.47 $696.30 $46.14 $742.44 $84,567.32 23 $84,567.32 $695.92 $46.52 $742.44 $84,520.80 24 $84,520.80 $695.54 $46.90 $742.44 $84,473.90 25 $84,473.90 $695.15 $47.29 $742.44 $84,426.61 26 $84,426.61 $694.76 $47.68 $742.44 $84,378.93 27 $84,378.93 $694.37 $48.07 $742.44 $84,330.86 28 $84,330.86 $693.97 $48.47 $742.44 $84,282.39 29 $84,282.39 $693.57 $48.87 $742.44 $84,233.52 30 $84,233.52 $693.17 $49.27 $742.44 $84,184.26 31 $84,184.26 $692.77 $49.67 $742.44 $84,134.58 32 $84,134.58 $692.36 $50.08 $742.44 $84,084.50 33 $84,084.50 $691.95 $50.49 $742.44 $84,034.00 34 $84,034.00 $691.53 $50.91 $742.44 $83,983.09 35 $83,983.09 $691.11 $51.33 $742.44 $83,931.76 36 $83,931.76 $690.69 $51.75 $742.44 $83,880.01 37 $83,880.01 $690.26 $52.18 $742.44 $83,827.84 38 $83,827.84 $689.83 $52.61 $742.44 $83,775.23 39 $83,775.23 $689.40 $53.04 $742.44 $83,722.19 40 $83,722.19 $688.96 $53.48 $742.44 $83,668.71 2 Balance of Loan after 2 yrs that is after 24th payment is - $84473.90 (Refer above table) 3 Balance of Loan after 3 yrs that is after 36th payment is - $83880.01 (Refer above table) 4 Principal Paid during third year (25th to 36th) - $593.86 5 Interest paid during third year (25th to 36th ) - $8315.40 6 How much interest paid in first month - $ 703.59 7 How much interest paid in the 37th month - $ 690.26 8 How much principal paid in first month - $ 38.84 9 How much principal paid during 37 month - $ 52.17 10 How much interest paid in Second year (13 to 24) - $ 8371.02

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