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MATH

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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.

  • MATH -

    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.

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