Question
Question: The price of a home is $180,000. The bank requires a 10% down payment. After the down payment, the balance is financed with a 30 year fixed mortgage at 6.3%. Determine the unpaid balance after ten years.
Answer: The unpaid balance after ten years is $136,641.85
I have the answer but I need help figuring out the formula used and the steps taken to get the answer. Please help.
Answer: The unpaid balance after ten years is $136,641.85
I have the answer but I need help figuring out the formula used and the steps taken to get the answer. Please help.
Answers
Reiny
First you have to find the payment.
You did not say, but I will assume that the payments are monthly.
let the payment be p
162000 = p( 1 - 1.00525^-360)/.00525
p = 1002.74
unpaid balance after 10 years
= balance if you had paid nothing - amount of the annuity for 10 years
= 162000(1.00525)^120 - 1002.74(1.00525^120 - 1)/.00525
= 136641.30
could be round-off error on their part, I kept max number of decimals using calculator's memories.
You did not say, but I will assume that the payments are monthly.
let the payment be p
162000 = p( 1 - 1.00525^-360)/.00525
p = 1002.74
unpaid balance after 10 years
= balance if you had paid nothing - amount of the annuity for 10 years
= 162000(1.00525)^120 - 1002.74(1.00525^120 - 1)/.00525
= 136641.30
could be round-off error on their part, I kept max number of decimals using calculator's memories.