Fixed-rate mortgage to buy new home

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Reference no: EM131964212

You need a 30-year, fixed-rate mortgage to buy a new home for $220,000. Your mortgage bank will lend you the money at a 7.1 percent APR for this 360-month loan. However, you can afford monthly payments of only $950, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment.

Required:

How large will this balloon payment have to be for you to keep your monthly payments at $950?

A) $657,585.25

B) $51,269.42

C) $78,637.68

D) $683,888.66

E) $637,857.69

Reference no: EM131964212

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