Question

You plan to purchase a $300,000 house using a mortgage obtained from your bank. The Mortgage rate offered to you is 4.50 percent for a 15 year Mortgage. You will make a down payment of 20 percent of the purchase price. Either using formula or Excel, calculate: A. Calculate your monthly payments on this mortgage? B. What is your loan balance at the end of 4 years (48 payment)? C. What is your loan balance at the end of 10 years (120 payments)? D. What is the total interest you will be paying on this mortgage? Show all your calculations if you want partial credit.

Answer 1

$ Purchase price Down Payment Loan amount Rate Years of mortgage Monthly payments Loan balance at end of 4 years $ Loan balance at end of 10 years $ Total Interest on mortgage $ 300,000.00 20% 240,000.00 4.50% 15 $ 1,835.98 178,594.97 63,101.30 90,477.10

Formulae

А 00 300000 3589 Purchase price 3590 Down Payment 3591 Loan amount 3592 Rate 3593 Years of mortgage 3594 Monthly payments 3595 Loan balance at end of 4 years 3596 Loan balance at end of 10 years 3597 Total Interest on mortgage 0.2 =B3589*(1-B3590) 0.045 15 I=PMT(B3592/12,B3593*12,-B3591) =B3591+CUMPRINC(B3592/12,B359312,B3589,1,48,0) =B3591+CUMPRINC(B3592/12,B3593*12,B3589,1,120,0) |--CUMIPMT(B3592/12,B3593*12,B3591,1,B3593*12,0)