You are considering the purchase of a $500,000 home. You plan to take a 30-year fixed mortgage after making a 20% downpayment to avoid PMI. Payments are to be made monthly (at the end of the month) and the APR is 8%.
What is the monthly payment?
During what month does the principal portion first exceed the interest portion? Are you surprised by your answer?
How long does it take to pay off your mortgage if you pay an additional $300 towards principal each payment?
How long does it take to pay off your mortgage if you pay an additional amount each month equal to the current month’s principal?