On Jan 1st, 2015, Sam takes out a 30-year mortgage loan for $350,000 at a 3.60% rate of interest. In March of 2018, Sam will receive an inheritance of $40,000 which he plans to use as a pre-pay on his mortgage balance. (Note: This prepay will occur right before the April 2018 payment.)
a. Given the pre-pay described, in what year and month will the mortgage be paid off if no other prepays are made for the remaining life of the loan?
b. If Sam instead chose to make regular prepays of an additional $350 on each payment starting with the April 2018 payment, what terminal month of the mortgage would result?
c. How much interest does Sam save over the entire life of the mortgage under each of these scenarios?