Shannon finances $189,000 with a 20/7 balloon mortgage at 6.25%. How much will she pay for principal and interest over the life of the loan?

Answer 1

Not totally familiar with US mortgage laws, since they differ slightly from my Canadian laws, but I'll take a shot

we need the monthly payment over a 20 year period:
i = .0625/12 = .00520833... ( I store that to keep accuracy)
n = 20(12) = 240
paym( 1 - 1.00520833..^-240)/.005208333 ... = 189000
I got paym = $1381.45

so now we need the balance after 7 years

outstanding balance
= 189000(1.005208333..)^84 - 1381.45(1.005208333^84 - 1)/.00520833..
= $147,291.59

see what you can do with that.