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You want to buy a house that costs $100,000 but only have 10,000 for down payment. The mortgage company will only lend you $90,000, so
You want to buy a house that costs $100,000 but only have 10,000 for down payment. The mortgage company will only lend you $90,000, so the realtor convinces the seller to take a $90,000 mortgage (called seller take-back mortgage) at a rate of 7% provided loan is paid off in full in 3 three years. You expect to inherit $100,000 in 3 years (but now only have the 10,000 for the down payment), and you can only afford $7,500 per payment each year. A. If loan is amoritzed for 3 years how large would each annual payment be and can you afford those payments? B. If load is amoritized over 30 years what would each payment be and can you afford the payments? C. To satisfy seller the 30 year mortgage loan would be written as a balloon note which means that at the end of the 3rd year you have to make regular payments plus balance on loan. What is the balance of the loan at year 3 and what is the balloon paymnent
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