Adam Wilson just purchased a home and took out a $250,000 mortgage for 30 years at 8%, compounded monthly.
a. How much is Adam’s monthly mortgage payment?
b. How much sooner would Adam pay off his mortgage if he made an additional $100 payment each month? The financial tables in Appendix A are not sufficiently detailed to do parts c and d. Solve them using a financial calculator.
c. Assume Adam makes his normal mortgage payments and at the end of five years, he refinances the balance of his loan at 6%. If he continues to make the same mortgage payments, how soon after the first five years will he pay off his mortgage?
d. How much interest will Adam pay in the 10th year of the loan
i. If he does not refinance
ii. If he does refinance