Explore BrainMass

Explore BrainMass

    Calculating annual payment of a mortgage

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Q1: You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. What will your annual payment be if you sign up for this mortgage?

    Q2: You would like to buy the house, but can only afford to pay $23,500 per year. The bank agrees to allow you to pay this amount each year, yet still borrow $300,000. At the end of the mortgage (in 30 years), you must make a balloon payment; that is, you must repay the remaining balance on the mortgage. How much will this balloon payment be?

    © BrainMass Inc. brainmass.com June 3, 2020, 10:22 pm ad1c9bdddf
    https://brainmass.com/business/annuity/calculating-annual-payment-of-a-mortgage-228019

    Solution Preview

    Q1: You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. What will your annual payment be if you sign up for this mortgage?

    Loan amount = $350000-$50000=$300,000
    Rate of interest = 7% per annum
    Period = ...

    Solution Summary

    Solution describes the steps for calculating annual payments for a loan. It also calculate the balloon payment to be made at the end of loan tenure if annual payments made are less than actual amount.

    $2.19

    ADVERTISEMENT