1 You have just purchased a new home and have taken out a mortgage loan for $250,000 at an interest rate of 4.50% and a maturity of 30 years. You will make 360 equal monthly payments.
a) What is the amount of your monthly payment? What is your Effective Annual Interest Rate (EAR), since you are required to make monthly rather than annual payments? Please fill in the amortization schedule below for the first two months of the 360 months that you will be paying on the mortgage.
Hint: PVA= payment[(1-(1+r)^-n)/r]
And
EAR = (1+((rnom)/m))^m – 1.0
b) Please fill in the amortization schedule below for the first two months of the 360 months that you will be paying on the mortgage.
First two Months of Amortization table:
Repayment Remaining
Month Payment Interest of Principal Principal Balance
1
2
c) Since you are moving elsewhere, you must sell the house and pay off the remaining balance your mortgage. You have made payments for 15 years (180 monthly payments). Assuming that you have made all of your payments on time, what is the mortgage payoff amount? You are aware that there are 15-years or 180 remaining monthly payments on your mortgage. You can determine the payoff amount without completing the amortization table, since the payoff amount is the PVA for the remaining payments.