Question
I am so stuck with this exercise, I need help please it's urgent! You want to take out a 15 year fixed rate amortized mortgage
I am so stuck with this exercise, I need help please it's urgent!
You want to take out a 15 year fixed rate amortized mortgage on a $500,000 house. Your bank requires a 20% down payment to be able to give you a mortgage for the remaining amount. Current mortgage rates are 9.5% (nominal rate, compounded monthly).
1.a Calculate your monthly payment on this mortgage.
1.b For your first monthly payment (calculated in 1.a), how much of this payment will go towards interest and how much will go towards principal repayment?
1.c After exactly one year (i.e., immediately after the 12th payment), assume that your amortizing table shows the principal left on your loan to be $387,335.19. On this date, you use your $200,000 annual bonus to reduce this principal outstanding on your mortgage, and you continue making the same monthly payment that was calculated in part (1.a). After how many months will the loan be fully paid off?
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