You purchase a house that costs $625,000 with an 8%, 30-year mortgage. You make a 20% down payment to avoid PMI insurance.

1. What is your monthly payment?

2. Amortize the first and second payments.

3. What is the mortgage balance after 5 years?

4. What percentage of the principal is paid off after 5 years?

5. Suppose after 5 years you refinance at 6% the remaining balance at a cost of $10,000, for 30 years. What is your new monthly payment?

6. Further, suppose you maintain the same payments as in (1), i.e. pre-pay on the principal, how many YEARS until you payoff the mortgage?