How much would you have to pay each month (current payment is 603.97) to pay off a 30 year mortgage with a $32,000 balance in five years or fewer?
Thanks
To calculate the monthly payment required to pay off a 30-year mortgage with a $32,000 balance in five years or fewer, we need to use an amortization formula. The formula is as follows:
Monthly Payment = P / ((1 - (1 + r)^(-n)) / r)
Where:
P = Principal balance (initial loan amount)
r = Monthly interest rate
n = Total number of monthly payments
First, let's calculate the monthly interest rate. Since you didn't provide an interest rate, we'll assume a representative value of 3.5%.
Monthly interest rate = Annual interest rate / 12
= 3.5% / 12
= 0.00292
Next, we need to calculate the total number of monthly payments. Considering a 30-year mortgage has 12 payments per year, we'll multiply 5 years by 12.
Total number of monthly payments = 5 years * 12 months/year
= 60 months
Now, we can plug these values into the formula:
Monthly Payment = 32000 / ((1 - (1 + 0.00292)^(-60)) / 0.00292)
To get the precise answer, we can use a calculator or spreadsheet software to perform the calculations:
Monthly Payment = 32000 / ((1 - (1 + 0.00292)^(-60)) / 0.00292)
≈ $588.36
Therefore, to pay off a $32,000 balance on a 30-year mortgage in five years or fewer, you would need to make monthly payments of approximately $588.36.