Question

Problem 4-38 Calculating Loan Payments You need a 35-year, fixed-rate mortgage to buy a new home for $260,000. Your mortgage bank will lend you the money at an APR of 5.55 percent for this 420-month loan. However, you can only afford monthly payments of $1,000, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at $1,000? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Balloon payment

Answer 1

=Loan*(1+r/12)^n-monthly amount/(r/12)*((1+r/12)^n-1)
=260000*(1+5.55%/12)^420-1000/(5.55%/12)*((1+5.55%/12)^420-1)
=520294.5322910