What is the amount of the new mortgage loan

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Question - A couple is buying a house for $ 250,000. With down payment of at least 20% a bank agrees to finance the rest through a mortgage loan with monthly payments, amortized over 25 years at j2 = 6.2%.

(a) If the down payment is exactly 20%, find the size of monthly payments.

(b) If this monthly payment is too high for them and they want it to be $1100, what down payment should they make?

(c) Suppose they are able to arrange for the down payment of part (b) and get the corresponding mortgage loan. If this mortgage is renegotiated after 5 years and a new mortgage loan is taken out on that date, for the balance owing at j2 = 5% with monthly payments amortized over the remaining 20 years,

(i) What is the amount of the new mortgage loan?

(ii) What is the new monthly payment?

(iii) What is the total interest paid by the couple over the first 5 years?

Reference no: EM132609806

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