Justin Case has purchased a $250 000 home by putting 20 % down and taking out a 25 year mortgage with semi monthly payme...

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Justin Case has purchased a $250 000 home by putting 20 % down and taking out a 25 year mortgage with semi monthly payme...

Justin Case has purchased a $250 000 home by putting 20 % down and taking out a 25 year mortgage with semi monthly payments of $600 to Finance the rest. The payments will be made at the end of each period.

What was the quoted interest rate for the mortgage ( with semi annual compounding) ?

Assume that Justin Makes every payment on time, what will be the total dollar amount of interest that he will pay over the life of the mortgage?

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Answer 1

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Answer #1

What was the quoted interest rate for the mortgage ( with semi annual compounding) ?
Quoted rate with semi monthly compounding=RATE(24*25,-600,250000*(1-20%))*24
=5.27%

rate with semi annual compounding=((1+5.27%/24)^12-1)*2
=5.334%

Assume that Justin Makes every payment on time, what will be the total dollar amount of interest that he will pay over the life of the mortgage?
=600*24*25-250000*(1-20%)
=160,000

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Answer 2

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