Question: You need a 2 5 - year, fixed - rate mortgage to buy a new home for $ 2 4 0 , 0 0 0

You need a

25 -

year, fixed

-

rate mortgage to buy a new home for $

240, 000 .

Your mortgage bank will lend you the money at a

8.6

percent APR for this

300 -

month loan. However, you can afford monthly payments of only $

850,

so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at $

850 ?

You need a

25 -

year, fixed

-

rate mortgage to buy a new home for $

240, 000 .

Your mortgage bank will lend you the money at a

7.6

percent APR for this

300 -

month loan. However, you can afford monthly payments of only $

850,

so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment.

How large will this balloon payment have to be for you to keep your monthly payments at $

850 ?

You need a 25-year, fixed-rate mortgage to buy a new home

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