You take out a 30-year $100,000 mortgage loan with an APR of 6 percent and monthly payments. In 12 years you decide to sell your house and pay off the mortgage. What is the principal balance on the loan?
I am working this on the assumption that your monthly rate is .005.
First we find our monthly payment:
100000= paym[1-(1.005)^-360]/.005
paym= 599.55
Now finding the amount of 144 of those payments
=599.55((1.005^144)-1)/.005
=125,995.64
Finding the value of our debt after 144 periods if no payments had been made
=100000(1.005^144
=205,075.08
So the outstanding balance after 12 years
= 205075.08-125995.64
=79,079.44
I hope you are familiar with the formulas I was using.
1 answer
If not, please let me know and I can explain them in more detail.
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