Question

You have just sold your house for $1,100,000 in cash. Your mortgage was originally a​ 30-year mortgage with monthly payments and an initial balance of $800,000. The mortgage is currently exactly​ 18½ years​ old, and you have just made a payment. If the interest rate on the mortgage is 5.25% ​(APR), how much cash will you have from the sale once you pay off the​ mortgage? ​(Note: Be careful not to round any intermediate steps less than six decimal​ places.)

Cash that remains after payoff of mortgage is ​$____. (Round to the nearest dollar.)

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

в Eoooo von AwN- Initial Mortgage loan balance Term in years APR, compounded monthly Monthly interest rate No. of monthly payments Monthly payments $800,000 30 5.25% 0.4375% 360 $4,417.63 No. of monthly payments made till 18.5 years Remaining no. of monthly payments Balance of Mortgage to be paid off at end of 18.5 years 222 138 $456,931 Sale value of House, today $1,100,000 Remaining Cash after mortgage payoff $643,069

Cell reference -

800000 30 Initial Mortgage loan balance Term in years APR, compounded monthly Monthly interest rate No. of monthly payments Monthly payments 0.0525 =C4/12 =C3*12 =PMT(C5, C6,-C2,,0) -monoFMF No. of monthly payments made till 18.5 years Remaining no. of monthly payments Balance of Mortgage to be paid off at end of 18.5 years =12*18.5 =C6-09 =PV(C5,C10,-C7,0) Sale value of House, today 1100000 Remaining Cash after mortgage payoff =C13-C11

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.