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What is the total interest paid on the loan

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Reference no: EM132677698

Question - You have just purchased a home with a $275,000 mortgage. The mortgage will be paid back over 10 years. The interest rate on the mortgage is initially set at 2.5% and will rise by 1% every 2 years. The payment will remain constant for the 2 year time period once it is reset. Construct an amortization table that shows the cash flows for the loan. What is the total interest paid on the loan? How much more interest do you pay with this structure versus if the loan was fixed for the whole 10 years at 2.5%. Assume your payments are made annually at the end of the year.

Reference no: EM132677698

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