how much would you have to pay each month to pay off a $32,000 remaining mortgage/30 years if you want to pay off in fewer than 5 years?
To calculate the monthly payment needed to pay off a mortgage in fewer than 5 years, we need to use the formula for a fixed-rate mortgage. The formula is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Where:
M = Monthly mortgage payment
P = Principal amount (remaining mortgage)
i = Monthly interest rate (annual interest rate divided by 12)
n = Number of monthly payments (number of years multiplied by 12)
First, we need to calculate the monthly interest rate. Let's assume an annual interest rate of 4%. So the monthly interest rate would be:
i = 0.04 / 12 = 0.0033
Next, we need to calculate the number of monthly payments for fewer than 5 years:
n = 5 years * 12 months/year = 60 months
Now, we can substitute these values into the formula:
M = 32000 [ 0.0033(1 + 0.0033)^60 ] / [ (1 + 0.0033)^60 – 1 ]
Using a scientific calculator or spreadsheet software, the calculation reveals that the monthly payment for a $32,000 mortgage paid off in fewer than 5 years would be approximately $594.67.
Please note that this calculation assumes a fixed interest rate over the entire mortgage term. It's important to check with your lender for the exact interest rate and any additional fees that may affect your monthly payment.