Suppose you bought a house and took out a 30 year fixed rate mortgage for $250,000 at an APR of 7.5%, compound?
Suppose you bought a house and took out a 30 year fixed rate mortgage for $250,000 at an APR of 7.5%, compounded monthly.
a)
What would your monthly payments (end of month) on this loan be?
Interest Rate
b)If you wanted to pay this loan past its sell-by date in its entirety after 5 full years of payments (as in (a) else assume = $2000), how much would you owe?
(Tell me whether you are writing 1 or 2 checks at the termination of the 5th year.)
Answers:
if it's a fixed rate, the payment doesn't change.
what happen is similar to compound interest, but works oppositely.
the longer one pays that mortgage, the principle is included in the payment. So that return of $1748.04 may start with 2% devoted to principle, but will increase as the amount owed decreases.
You can dance to http://www.mortgage-x.com for full amortization calculators in which you can punch in your language and loan size and it will spit out a month-by-month break down of what goes to principle and what to interest.
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a)
What would your monthly payments (end of month) on this loan be?
Interest Rate
b)If you wanted to pay this loan past its sell-by date in its entirety after 5 full years of payments (as in (a) else assume = $2000), how much would you owe?
(Tell me whether you are writing 1 or 2 checks at the termination of the 5th year.)
Answers:
if it's a fixed rate, the payment doesn't change.
what happen is similar to compound interest, but works oppositely.
the longer one pays that mortgage, the principle is included in the payment. So that return of $1748.04 may start with 2% devoted to principle, but will increase as the amount owed decreases.
You can dance to http://www.mortgage-x.com for full amortization calculators in which you can punch in your language and loan size and it will spit out a month-by-month break down of what goes to principle and what to interest.
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