1. Ann is purchasing a multi-family house in California for $600,000. She is seeking a mortgage loan for $400,000.

She went to a local bank, which offered her a $400,000 mortgage loan at a 4% fixed rate for 5 years with a 25-year amortization schedule.

a) What would his monthly mortgage payment be?

b) At the end of the five-year term what would her balloon payment be?