Problem $7-16$

This extended problem covers many of the features of a mortgage. You purchase a town house for $$350,000.$ Since you are able to make a down payment of $10$ percent

$($ $$35,000),$ you are able to obtain a $$315,000$ mortgage loan for $20$ years at a $4$ percent annual rate of interest. Use Appendix D to answer the questions. Round your

answers to the nearest dollar.

a$.$ What are the annual payments that cover the interest and principal repayment?

$

b$.$ How much of the first payment goes to cover the interest?

$

c$.$ How much of the loan is paid off during the first year?

$

d$.$ What is the interest payment during the second year?

$

e$.$ What is the remaining balance after the second year?

$

f$.$ Why did the interest payment change during the second year?

The annual

in the amount owed

each subsequent interest payment.