Question
A young couple buys their dream house. After paying their down payment and closing costs, the couple borrows $436977 from the bank. The terms of
A young couple buys their dream house. After paying their down payment and closing costs, the couple borrows $436977 from the bank. The terms of the mortgage are 30 years of monthly payments at an APR of 5% with monthly compounding. Suppose the couple wants to pay off their mortgage early and will make extra payments to accomplish this goal. Specifically, the couple will pay an extra $2000 every 12 months. (This extra amount is in addition to the regular scheduled mortgage payment.) The first extra $2000 will be paid at the same time as the final monthly payment of the first year of the mortgage. What will be the balance of the loan after the first year of the mortgage?
Select one: a. $428399.87 b. $428529.99 c. $430399.87 d. $430529.99
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started