You have just negotiated a 5 year mortgage on $400,000 amortized over 25 years at a rate of 2% per year compounded semi annually.
a. What are the monthly payments?
b. Assume after 5 years the bak reviews the terms of your mortgage with the same interest rate. What is the outstanding balance on your mortgage after 5 years of payments?
c. How much interest has been paid over the first 5 years?
d. Now you decide to increse your monthly payments by $100 ( you have alreaday completed 5 years of payments as above) How many more payments will be required to pay off the loan?
e. Assume instead at the end of the 5 years contract your mortgagae rate changes to 4%. what is your new montly payment?