Question
Jane and her husband purchased a townhouse for $750,000. They made a down payment of 20% of the value of the house and receive a
Jane and her husband purchased a townhouse for $750,000. They made a down payment of 20% of the value of the house and receive a mortgage for the rest of the amount at 3.15% compounded semi-annually for 25 years. The interest rate was fixed for 5-year period.
(a) Calculate the monthly payment amount. Note: the bank rounds the payment up to the next dollar.
(b) How much of the 1st payment is interest?
(c) By how much the balance owing reduced after making 5 years of payment?
(d) After five years, they made a lump-sum payment to reduce the balance owing to $480,000. How much was the lump-sum payment?
(e) The interest decreases toj2= 2.95% after 5 years. They took a $480,000 mortgage for 20 years. Instead of monthly payment, they would like to make a bi-weekly payment. What is the size of the bi-weekly payment assuming bank rounds the payment up to the next dollar?
(f) What is the size of the final bi-weekly payment assuming the same interest rate over the 20 years?
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