annuity_man
New member
- Joined
- May 22, 2008
- Messages
- 14
Ok I have this question
Matthew is looking to purchase a house that is currently priced at $520,000 and he is expecting to put a 10% down payment. A bank has offered him 6.5% mortgage rate with a 5-year term amortized over 25 years. Interest is compounded semi-annually. Matthew is uncertain of what his monthly payments will be.
a)What are Matthews’s monthly payments?
b)Assume Matthew receives and contributes $2,000 lump-sum from his investments, every 6 months for the first 5 years. Calculate the remaining principle amount on the house after 5 years.
c)Based on part b) how long will it take Matthew to pay off the mortgage?
d)How much interest has Matthew saved by making the extra payments?
The work I have done is:
Picture 1:
http://img393.imageshack.us/img393/448/top020retqd3.png
and
Picture 2:
http://img384.imageshack.us/img384/7530/qwdwfjh3.png
Can someone please check if my monthly payment amount is correct?
My monthly payment amount is $3,314.77.
I also tried part b). I was trying to figure out how much the simple interest and compound interest would be at the 6th month (where the $2,000 lump sum would be paid. In Picture 2, I think I'm trying something that isn't supposed to happen... (I'm thinking that the 12th payment would be more than $3134.7.., is this correct?)
But, it came to an error. I don't know where I am making the mistake.
Thank you beforehand for the help.
Matthew is looking to purchase a house that is currently priced at $520,000 and he is expecting to put a 10% down payment. A bank has offered him 6.5% mortgage rate with a 5-year term amortized over 25 years. Interest is compounded semi-annually. Matthew is uncertain of what his monthly payments will be.
a)What are Matthews’s monthly payments?
b)Assume Matthew receives and contributes $2,000 lump-sum from his investments, every 6 months for the first 5 years. Calculate the remaining principle amount on the house after 5 years.
c)Based on part b) how long will it take Matthew to pay off the mortgage?
d)How much interest has Matthew saved by making the extra payments?
The work I have done is:
Picture 1:
http://img393.imageshack.us/img393/448/top020retqd3.png
and
Picture 2:
http://img384.imageshack.us/img384/7530/qwdwfjh3.png
Can someone please check if my monthly payment amount is correct?
My monthly payment amount is $3,314.77.
I also tried part b). I was trying to figure out how much the simple interest and compound interest would be at the 6th month (where the $2,000 lump sum would be paid. In Picture 2, I think I'm trying something that isn't supposed to happen... (I'm thinking that the 12th payment would be more than $3134.7.., is this correct?)
But, it came to an error. I don't know where I am making the mistake.
Thank you beforehand for the help.