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You are in the market for a home. You saved up $150,000 for a down payment that will go towards your home purchase. You meet
You are in the market for a home. You saved up $150,000 for a down payment that will go towards your home purchase. You meet with the bank and the bank offers you a $750,000, 25-year mortgage loan. Monthly payments will be $4,022.81 at the beginning of the month.
- What nominal interest rate, compounded quarterly, does the bank charge you?
- For your 50th mortgage payment, what is the principal repayment portion of this payment?
- Suppose you win the lottery in exactly 12 years after you open your mortgage. You would like to pay back the mortgage loan in a lump-sum payment. How much will you need to repay in 12 years time, assuming there are no penalty fees? [Hint: what's the outstanding balance in 12 years?]
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