Five years ago, you bought a house for $171,000. You had a down payment of $35,000, which meant you took out a loan for $136,000. Your interest rate was $5.6% fixed. You would like to pay more on your loan. You check your bank statement and find the following information.
•Escrow payment: $232.78
•Principle and Interest payment: $751.90
•Total payment: $984.68
•Current Loan balance: $121,259.44
As you can see below in the "related Questions" , this problem has been posted several times without any replies.
First of all you don't ask any question, did you mean
http://www.jiskha.com/display.cgi?id=1321025332 ?
There appears to be some discrepancy in the given data.
From your question, we cannot tell what the original time was to determine the principal and interest payment of $751.90.
Working backwards with a Present value of 136000, I came up with appr. 399 payments which is 33 1/4 years
Secondly with a present value of 136000 and payments for 5 years at 5.6% per annum compounded monthly would leave a balance of
$127904.15 , and not $121259.44 as you stated.
(balance = 136000(1.004666667)^60 - 751.9(1.00466667^60 - 1)/.00466667 = $127904.15 )
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Assignment 2: Financial Project
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
Identify the highest interest rate you could refinance at in order to pay the current balance off in 20 years and determine the interest rate, to the nearest quarter point, that would require a monthly total payment that is less than your current total payment. The interest rate that you qualify for will depend, in part, on your credit rating. Also, refinancing costs you $2,000 up front in closing costs.
(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 2. What is your decision?
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Apply finance formulas and logarithms to amortize loans and calculate interest.
Use technology and information resources to research issues in algebra.
Write clearly and concisely about algebra using proper writing mechanics.
To find out how much you would need to pay each month in order to pay off your loan faster, you will need to calculate the remaining number of months on your loan.
First, let's calculate the number of months you have already paid:
Total Payments = Number of Months Paid * Monthly Payments
Since you have already paid for five years, which is 60 months, and your monthly payments are $984.68, we can rearrange the formula to find the number of months paid:
Number of Months Paid = Total Payments / Monthly Payments
Number of Months Paid = $984.68 / $984.68 = 1
Next, let's calculate the remaining number of months on your loan:
Loan Term = Total Loan Duration - Number of Months Paid
Since the total loan duration is 30 years, or 360 months, we can calculate the remaining number of months:
Remaining Number of Months = 360 - 60 = 300 months
Now, let's calculate the monthly payment needed to pay off the remaining loan balance of $121,259.44 in the remaining 300 months:
Monthly Payment = Remaining Loan Balance / Remaining Number of Months
Monthly Payment = $121,259.44 / 300 = $404.20
Therefore, to pay off your loan faster, you would need to increase your monthly payment to $404.20 instead of the current $984.68.
Please note that this calculation assumes the interest rate remains the same and does not include any additional fees or charges. It's always a good idea to consult with your lender or financial advisor to confirm the exact amount and terms of your loan repayment.