SOLUTION: The Simpsons are moving into their new home. They purchased it for $300,000 by putting a down payment of $120,000 towards the purchase and paying the balance with a $180,000 mortga
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Question 1163691: The Simpsons are moving into their new home. They purchased it for $300,000 by putting a down payment of $120,000 towards the purchase and paying the balance with a $180,000 mortgage amortized over 25 years at 4.9% per annum (for a 3-year term). At the end of the 3-year term, the interest rate increased by 0.5%.
What is the approximate increase in their monthly payment?
you first calculate the monthly payment for a 25 year mortgage with a 3 year term at 4.5% per year.
the calculator tells you that the monthly payment is 1,000.4985 with a balloon payment at the end of the 3 year term os 167,479.3474.
here are the inputs and outputs for that analysis.
you then calculate the monthly payment for a 22 year mortgage with a 22 year term at 5% per year.
the 22 year term on a mortgage for 22 years effectively makes it a straight 22 year loan with no balloon payment.
you will b3e able to see this because the balloon payment comes out as 0.
there are other ways to calculate this (i used a TI-BA-II and i used excel), but this is the most straight forward and easy to do this since this calculator is designed to handle balloon payments.
