You are planning to buy a $300,000 house using a 30-year mortgage that requires equal monthly payments starting one month from today. The annual interest rate is 6.6%, compounded monthly.

1. Calculate your monthly payments.
2. How much have you paid off the mortgage after 10 years?
3. Suppose you are planning to refinance this mortgage after 10 years at an annual interest of 3.6%, compounded monthly, for the remainder of the term. However, you are going to be charged a 10% prepayment penalty. Calculate your monthly payments and state whether you should refinance or not.
4. Suppose you are offered a teaser rate with this mortgage. The annual interest rate is going to be 1.2%, compounded monthly, for the first 3 years and then become 7.2%, compounded monthly, for the remainder of the term. Calculate your monthly payments for the first 3 years and the remainder of the term.

Answer rating: 100% (QA)

PV 300000 N 3012 360 R 66 annual Monthly Payment 1916 Total Mortgaged paid till 10 years 45... View the full answer