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    Part 3

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    1) The monthly payment for a 30-year, $180,900 mortgage at 4.975% annual interest is $1,405.70. This payment covers only interest and principal, not taxes or insurance. 2) An amortization schedule tracks the payment number, principal paid, interest, and unpaid balance over the life of the loan. For this 30-year mortgage, the total interest paid over 15 years is $72,126. The payment switches to paying more principal than interest after the 5th payment. 3) Making an additional $100 monthly payment reduces the loan term to 163 months and the total interest to $64,712.80, saving $7,412.71 compared to

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    Part 3

    Uploaded by

    api-282191219
    61 views2 pages
    1) The monthly payment for a 30-year, $180,900 mortgage at 4.975% annual interest is $1,405.70. This payment covers only interest and principal, not taxes or insurance. 2) An amortization schedule tracks the payment number, principal paid, interest, and unpaid balance over the life of the loan. For this 30-year mortgage, the total interest paid over 15 years is $72,126. The payment switches to paying more principal than interest after the 5th payment. 3) Making an additional $100 monthly payment reduces the loan term to 163 months and the total interest to $64,712.80, saving $7,412.71 compared to

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    1) The monthly payment for a 30-year, $180,900 mortgage at 4.975% annual interest is $1,405.70. This payment covers only interest and principal, not taxes or insurance. 2) An amortization schedule tracks the payment number, principal paid, interest, and unpaid balance over the life of the loan. For this 30-year mortgage, the total interest paid over 15 years is $72,126. The payment switches to paying more principal than interest after the 5th payment. 3) Making an additional $100 monthly payment reduces the loan term to 163 months and the total interest to $64,712.80, saving $7,412.71 compared to

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    61 views2 pages

    Part 3

    Uploaded by

    api-282191219
    1) The monthly payment for a 30-year, $180,900 mortgage at 4.975% annual interest is $1,405.70. This payment covers only interest and principal, not taxes or insurance. 2) An amortization schedule tracks the payment number, principal paid, interest, and unpaid balance over the life of the loan. For this 30-year mortgage, the total interest paid over 15 years is $72,126. The payment switches to paying more principal than interest after the 5th payment. 3) Making an additional $100 monthly payment reduces the loan term to 163 months and the total interest to $64,712.80, saving $7,412.71 compared to

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Monthly Payment: Calculate the monthly payment for a 30 year loan (rounding up

    to the nearest cent) by using the following formula. SHOW YOUR WORK [PMT is
    the monthly loan payment, P is the mortgage amount, r is the annual percent rate
    for the loan in decimal, and Y is the number of years to pay off the loan]. For the 30
    year loan, use an annual interest rate of 4.975%

    r
    12

    1 1+

    P
    PMT =

    12 r

    ( 12r )

    Show work here:

    .04975 12( 15 )
    12

    .04975
    180900
    12

    PMT =

    1 1+

    Monthly Payment for a 30-year mortgage: $1,405.70


    Note that this monthly payment covers only the interest and the principle on the
    loan. It DOES NOT COVER any insurance or taxes on the property.
    AMORTIZATION SCHEDULE: In order to summarize all the information regarding the
    amortization of a loan, construct a schedule that keeps track of the payment
    number, the principle paid, the interest, and the unpaid balance. A spreadsheet
    program is an excellent tool to develop an amortization schedule.
    Amortization Schedule monthly payment for a 30-year mortgage: $1,405.70
    Total interest paid over 15 years: $72,126.00
    Total amount paid: $235,026.00
    Number of first payment when more of payment goes toward principle than interest:
    5

    Suppose you paid an additional $100 towards the principle each month. How long
    would it take to pay off the loan with this additional payment and how will this affect
    the total amount of interest paid on the loan?
    Length of time to pay off loan with additional payments of $100 per month: 163
    months

    Total interest paid over the life of the loan with additional $100 monthly payments:
    $64,712.80
    Total amount paid with additional $100 monthly payments: $245,612.80
    Compare this total amount paid to the total amount paid without extra monthly
    payments. How much more would you spend if you made the extra principle
    payments?

    253,025.51245,612.80=$ 7,412.71
    You would spend $7,412.71 less than the total amount paid

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