SOLUTION: You borrow $650,000 from a mortgage company for a 30 year loan at 7.1% interest to purchase a home How much money do you still owe the lending company after making monthly paymen

Algebra ->  Finance -> SOLUTION: You borrow $650,000 from a mortgage company for a 30 year loan at 7.1% interest to purchase a home How much money do you still owe the lending company after making monthly paymen      Log On


   

Question 1199495: You borrow $650,000 from a mortgage company for a 30 year loan at 7.1% interest to purchase a home
How much money do you still owe the lending company after making monthly payments for 20 years
Answer by math_tutor2020(3816) About Me  (Show Source):
You can put this solution on YOUR website!

The remaining balance formula is
B = L*( (1+c)^n - (1+c)^p )/( (1+c)^n - 1 )

Here are the variables
B = remaining balance
L = loan amount
c = monthly interest rate in decimal form
n = number of months total
p = number of months you are into the mortgage

Refer to this page for more info
https://www.mtgprofessor.com//formulas.htm

In this case,
L = 650000
c = 0.071/12 which I'll leave in fraction form to have the best accuracy
n = 12*30 = 360 months
p = 12*20 = 240 months

Let's compute the remaining balance
B = L*( (1+c)^n - (1+c)^p )/( (1+c)^n - 1 )
B = 650000*( (1+0.071/12)^360 - (1+0.071/12)^240 )/( (1+0.071/12)^360 - 1 )
B = 374553.109454018
B = 374553.11

Answer: $374,553.11