Rob and Laura desire to purchase a new home. Price is $300,000 and they plan to put 25% down. New Rochelle Savings and Loan will lend them the remainder at 8% per annum, compounded semi-annually for a 25-year term. Monthly payments are to start in one month.
1) Compute their monthly payments be?
2) Suppose they pay off loan over the 25-year period as planned, determine the total cost (principal + interest + down payment) of house?
3) Determine the outstanding balance of loan be after 10 years, suppose they make first 120 payments on time?
4) Assume they want to pay off loan in 15 years. How much extra should they pay each month to do so?
5) Illustrate the first six months in amortization table for 25-year mortgage.