If you took a home mortgage loan of $150,000 for 30 years at 8.4% compounded monthly, your monthly payments would be $ 1142.76. Suppose after 2 years you had an additional $2000. Would you save more over the life of the loan by paying an extra $2000 with your 24th payment or by paying $I 160 per month beginning with the 25th payment? To help you answer this question, complete the following. Find the unpaid balance after 24 payments (both including and not including the $2000 payment). Determine how long it takes to pay off the loan with the regular $1142.76 payments and the additional $2000 payment. Then find the total interest paid. Determine how long it takes to pay off the loan without the additional $2000 payment, but with monthly payments of $1160 from the 25th payment. Then find the total interest paid. Which payment method costs less?
If you took a home mortgage loan of $150,000 for 30 years at 8.4% compounded monthly, your monthly payments would be $ 1142.76. Suppose after 2 years you had an additional $2000. Would you save more over the life of the loan by paying an extra $2000 with your 24th payment or by paying $I 160 per month beginning with the 25th payment? To help you answer this question, complete the following. Find the unpaid balance after 24 payments (both including and not including the $2000 payment). Determine how long it takes to pay off the loan with the regular $1142.76 payments and the additional $2000 payment. Then find the total interest paid. Determine how long it takes to pay off the loan without the additional $2000 payment, but with monthly payments of $1160 from the 25th payment. Then find the total interest paid. Which payment method costs less?
Solution Summary: The author calculates the amount of unpaid balance after 24 payments if repay the loan of 150,000 with an interest rate 8.4% compounded monthly for 30 years.
If you took a home mortgage loan of $150,000 for 30 years at 8.4% compounded monthly, your monthly payments would be $ 1142.76. Suppose after 2 years you had an additional $2000. Would you save more over the life of the loan by paying an extra $2000 with your 24th payment or by paying $I 160 per month beginning with the 25th payment? To help you answer this question, complete the following.
Find the unpaid balance after 24 payments (both including and not including the $2000 payment).
Determine how long it takes to pay off the loan with the regular $1142.76 payments and the additional $2000 payment. Then find the total interest paid.
Determine how long it takes to pay off the loan without the additional $2000 payment, but with monthly payments of $1160 from the 25th payment. Then find the total interest paid.
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