Five years ago, you bought a house for $151,000, with a down payment of $30,000, which meant you took out a loan for $121,000. Your interest rate was 5.75% fixed. You would like to pay more on your loan. You check your bank statement and find the following information:

Escrow payment


$211.13

Principle and Interest payment


$706.12

Total Payment


$917.25

Current Loan Balance


$112,242.47

Explain how much additional money you would need to add to your monthly payment to pay off your loan in 20 years instead of 25.

P = (Po*r*t)/(1-(1+r)^-t).

Po = $112,242.47.

r = (5.75%/12) / 100% = 0.0048 = Monthly
% rate expressed as a decimal.

t = 12mo./yr * 20yrs = 240 Months.

Plug the above values in the given Eq
and solve for P.
Answer:P = $189,282.43
Monthly(I+P)=P/t=189282.43 / 240=$788.51

788.51 - 706.12 = $82.39 Higher.
This amount will be added to the previous monthly payment of $917.25.

To calculate how much additional money you would need to add to your monthly payment to pay off your loan in 20 years instead of 25, we need to determine the new monthly payment amount.

1. Calculate the remaining loan term for 25 years: The remaining loan term after 5 years would be 25 - 5 = 20 years.

2. Find the number of monthly payments for the remaining 20 years: Multiply the remaining term (20 years) by 12 months to get 240 months.

3. Determine the remaining loan balance: Given that the current loan balance is $112,242.47, this is the amount you still need to repay.

4. Use the remaining loan balance and the remaining term to calculate the new monthly payment:

Monthly Payment = Remaining Loan Balance / Remaining Number of Payments

Monthly Payment = $112,242.47 / 240

Monthly Payment = $467.68 (approximately)

Your current monthly payment is $706.12. To pay off the loan in 20 years instead of 25, you need to increase your monthly payment by the difference between the current payment and the new payment:

Additional Monthly Payment = New Monthly Payment - Current Monthly Payment

Additional Monthly Payment = $467.68 - $706.12

Additional Monthly Payment = -$238.44 (approximately)

Since the additional monthly payment is negative, it means you would need to decrease your current monthly payment by $238.44 to pay off the loan in 20 years instead of 25.