A young couple buys their dream house.After paying their down payment and closing costs,the couple has borrowed $400,000 from the bank.The terms of the mortgage are 30 years of monthly payments at an APR of 6% with monthly compounding.Suppose the couple wants to pay off their mortgage early,and will make extra payments to accomplish this goal.Specifically,the couple will pay an EXTRA $2,000 every 12 months (this extra amount is in ADDITION to the regular scheduled mortgage payment).The first extra $2,000 will be paid after month 12.What will be the balance of the loan after the first year of the mortgage?

Question

Quizplus · Accepted Answer

n=360,r=.5%,PV=$400,000,FV=0,PMT=?=$2,398.20
Balance after 12 payments = use AMORT Table
For TI BA II Plus,P1=1,P2=12,BALANCE = $395,087.95
New Balance = $395,087.95-$2,000=$393,087.95

A Young Couple Buys Their Dream House