Assignment 2: Financial Project

Question

Due Week 7 and worth 55 points

Five (5) years ago, you bought a house for $171,000, with a down payment of $30,000, which meant you took out a loan for $141,000. Your interest rate was 5.75% fixed. You would like to pay more on your loan. You check your bank statement and find the following information:


Escrow payment


$261.13


Principle and Interest payment


$822.84


Total Payment


$1,083.97


Current Loan Balance


$130,794.68




Write a one to two (1-2) page paper in which you address the following:

Part 1

With your current loan, explain how much additional money you would need to add to your monthly payment to pay off your loan in 20 years instead of 25. Decide whether or not it would be reasonable to do this if you currently meet your monthly expenses with less than $100 left over.
•(a) Explain your strategy for solving the problem.
•(b) Present a step-by-step solution of the problem.
•(c) Clearly state your answer to Part 1. What is your decision?



Part 2