Question
Suppose you are offered a bullet loan. The payments are made monthly and they are calculated using a 30-year traditional mortgage. So, you have 5-year
Suppose you are offered a bullet loan. The payments are made monthly and they are calculated using a 30-year traditional mortgage. So, you have 5-year bullet. In this situation, you will make the payments for the 30-year traditional mortgage in the first 5 years, but the bullet payment is due after you make the 60th payment. Note that the bullet payment is the remaining principal of the loan which can calculated using amortization table, however, in addition, it is the PV of the remaining 25-years of mortgage payments for the 30-years mortgage. Find the payments on this type of loan.
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