August 22, 2014

Homework Help: Finance

Posted by Antoinette on Sunday, March 18, 2007 at 11:49pm.

You take out a 30-year $100,000 mortgage loan with an APR of 6 percent and monthly payments. In 12 years you decide to sell your house and pay off the mortgage. What is the principal balance on the loan?

I am working this on the assumption that your monthly rate is .005.

First we find our monthly payment:

100000= paym[1-(1.005)^-360]/.005

paym= 599.55

Now finding the amount of 144 of those payments

Finding the value of our debt after 144 periods if no payments had been made

So the outstanding balance after 12 years
= 205075.08-125995.64

I hope you are familiar with the formulas I was using.

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