Rob and Laura wish to buy a new home. The price is $300,000 and they plan to
Question:
Rob and Laura wish to buy a new home. The price is $300,000 and they plan to put 25% down. New Rochelle Savings and Loan will lend them the remainder at 8% per annum, compounded semi-annually for a 25-year term. The monthly payments are to begin in one month.
a. How much will their monthly payments be?
b. Assuming they pay off the loan over the 25-year period as planned, what will be the total cost (principal + interest + down payment) of the house?
c. What will the outstanding balance of the loan be after 10 years, assuming they make the first 120 payments on time?
d. Suppose they want to pay off the loan in 15 years. How much extra must they pay each month to do so?
e. Show the first six months in the amortization table for the 25-year mortgage.
Step by Step Answer:
Personal Financial Planning
ISBN: 978-1305636613
14th edition
Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk