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Question 573113: 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. How much additional money would you need to add to your monthly payment to pay off your loan in 20 years instead of 25
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! the original loan was a 30 year loan.
that was 5 years ago.
you have 25 years remaining to go.
you want to do it in 20.
payment for 25 remaining years would remain the same at $706.12.
Escrow will presumably remain the same if i understand what i've been reading correctly (see link below).
http://www.money-zine.com/Financial-Planning/Buying-a-Home/Escrow-Accounts/
payment for 25 years remaining on the mortgage is still $706.12.
payment for 20 years at the same interest rate will be $788.0342986 per month payable at the end of each month.
the difference between the 25 years remaining and the 20 years remaining payment is $788.03 - $706.12 = $81.91 per month.
You'll be paying $81.91 per month more but will be paying it for 20 remaining years rather than 25.
if you have a financial calculator, all you do is enter the remaining balance as the present value of the loan and then enter the number of months for 20 years rather than 25 and then have the calculator compute the new monthly payment.
if you don't have a financial calculator, there are calculators on line that you can use.
one such calculator can be found here:
http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx
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