A homeowner just bought a house and entered into a 30 year mortgage of $250,000. Set up an amortization schedule for loan to be repaid in equal installments at the end of each month over 30 years (360 payments). The interest rate is 5%.
a. For the 30th payment how much of the payment is payment of principle vs interest.
b. The homeowner was expecting to use an annual bonus to be made as an additional payment of $5,000 every 12th payment in addition to the normal loan payment. The homeowner’s goal was to reduce the overall amount of interest paid on the loan.
a. For the 30th payment how much is now the payment of principle vs. interest.
b. How many months will it now take to pay off the loan?