Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

House Mortgage Suppose you purchase a house for $580,000 and make a down payment of 23% of the purchase price. The balance is amortized over

image text in transcribed
House Mortgage Suppose you purchase a house for $580,000 and make a down payment of 23% of the purchase price. The balance is amortized over 25 years. The house mortgage agreement is subject to 3.105% compounded semi-annually for the first five years and requires equal monthly payments. - What is the size of the equal monthly payments for the first five years? - What is the house mortgage balance at the end of the five years? Perform this calculation using Excel, without an amortization schedule. After five years, the house mortgage is refinanced at a reduced nominal rate of 2.731% compounded semi-annually and the house mortgage is amortized over the remainder of the term. - What is the size of the new mortgage payments for the remainder of the term? - What is the size of the final loan payment? Perform this calculation in Excel, without an amortization schedule. Prepare one complete amortization schedule showing the mortgage amortized over the full 25-year period (reflecting the change in payment size). Cell reference values appropriately. ROUND all monetary values to the nearest cent. Express only the totals as currency. Highlight the calculated payment for the first five years and the first payment on the amortization schedule using one colour. Highlight the new payment and the first new payment on the amortization schedule with a second colour. Perform checks of your calculated values compared to the amortization schedule values. - Highlight the calculated principal balance of the loan after five years and the balance shown in the amortization schedule using a third colour. - Highlight the calculated final loan payment and the amortization schedule final payment using a fourth colour. Use the amortization schedule value directly to answer this question: What would be the total cost of financing your house mortgage assuming that the rate did change after five years, as detailed above? Highlight the statement and the amortization schedule value using a fifth colour

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Reform Of The International Monetary System An Asian Perspective

Authors: Masahiro Kawai, Mario B Lamberte, Peter J Morgan

1st Edition

4431550348, 9784431550341

More Books

Students also viewed these Economics questions