Finding outstanding balance in word problem

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Sue0113

Junior Member
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Feb 1, 2012
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What is the outstanding balance after 23 payments on a 20 year mortgage that has monthly payments
of $1062.32 and an interest rate of 6.6% compounded monthly?
Is this an amortization question?
i/y=6.6 n=240 c/y=12 p/y=12 pmt=1062.32
These are the varibles I have not sure where to go from here, help please!
 
You do NOT need to calculate what I am about to ask...

The original term was 20 years, or 240 months.

What was the original balance?

Ignore that this is a progressing 20 year mortgage and do EXACTLY the same thing with 240-23 = 217 payments.
 
Can you calculate the original balance on the 20 year mortgage?
 
original balance

PV=1062.32(1-1.0055^-240/.0055)
PV=1062.32(.731897/.0055)
PV=1062.32(133.072)
PV=141365.1994
Is this original balance?
 
You have it!

Now, make ONE change and you are done. Use 217 instead of 240.

Next time, don't bother to calculate the original balance unless someone asks.
 
so answer is

1062.32(1-1.005^217/.0055)
1062.32(.695849/.0055)
1062.32(126.517937)
=134402.54
The outstanding balance is $134402.54
 
That's all there is to it.

Note: I'm a little nervous that you mentioned c/y and then p/y above. I think your calculator demands that you enter p/y first, and then c/y, otherwise it just resets c/y to whatever you just entered for p/y.
 
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