5 YEARS AGO BROUGHT A HOUSE FOR 171,000 WITH A DOWN PAYMENT OF 30,000 MAKING ME BORROW 141,000 WITH AN INTEREST RATE OF 5.75% OVER 25 YRS. HOW MUCH MORE MONEY WILL I NEED TO PAY TO PAY OFF IN 20YRS, AND WILL IT BE WORTH IT CAUSE I ONLY HAVE A $100 LEFT OVER NOW WITH CURRENT EXPENSES.
To determine the amount of money you need to pay off your mortgage in 20 years, we will need to calculate the remaining balance on your loan after 5 years, and then calculate the new monthly payment required to pay off the remaining balance in the remaining 15 years.
1. Calculate the remaining balance after 5 years:
To calculate the remaining balance after 5 years, we need to determine the monthly payment and the number of payments made.
First, calculate the number of monthly payments: 25 years (loan term) multiplied by 12 months/year equals 300 monthly payments.
Next, calculate the monthly payment using the loan amount, interest rate, and loan term. We can use a mortgage calculator to do this.
Using the provided information: loan amount = $141,000, interest rate = 5.75%, loan term = 25 years.
Plugging these values into a mortgage calculator, the monthly payment comes out to be approximately $902.20.
To determine the remaining balance after 5 years, we need to calculate the number of payments made. Since it has been 5 years, multiply 5 years by 12 months/year, which equals 60 payments.
Using the remaining balance formula, we can calculate the remaining balance:
Remaining Balance = Principal * (1 + Monthly Interest Rate) ^ Number of Payments - Monthly Payment * [((1 + Monthly Interest Rate) ^ Number of Payments) - 1] / Monthly Interest Rate
First, calculate the monthly interest rate by dividing the annual interest rate by 12 and converting it to a decimal:
Monthly Interest Rate = 5.75% / 100 / 12 = 0.004792
Substituting the values into the formula:
Remaining Balance = $141,000 * (1 + 0.004792) ^ 60 - $902.20 * [((1 + 0.004792) ^ 60) - 1] / 0.004792
Using a calculator, the remaining balance after 5 years comes out to be approximately $132,155.53.
2. Calculate the new monthly payment for the remaining 15 years:
Now that we have the remaining balance after 5 years, we can calculate the new monthly payment required to pay it off over the next 15 years.
Using the remaining balance ($132,155.53), loan term (15 years), and the same interest rate (5.75%), we can calculate the new monthly payment using a mortgage calculator.
Plugging in these values into the mortgage calculator, the new monthly payment comes out to be approximately $1,102.03.
3. Calculate the additional amount needed:
To find out how much more money you will need to pay off your mortgage in 20 years, subtract your remaining balance after 5 years ($132,155.53) from the original loan amount ($141,000).
Additional amount needed = original loan amount - remaining balance after 5 years
Additional amount needed = $141,000 - $132,155.53
Additional amount needed = $8,844.47
Therefore, you would need an additional amount of approximately $8,844.47 to pay off your mortgage in 20 years.
Considering your current financial situation, it is essential to evaluate whether it is financially feasible to make higher monthly payments for the next 15 years. If you're left with only $100 after covering your current expenses, it may be challenging to afford the higher monthly payments of approximately $1,102.03. It's crucial to budget and consider your financial stability and priorities before committing to higher mortgage payments.