Question

Cliff Branch bought a home with a 10.5% adjustable rate mortgage for 30 years. He paid $9.99 monthly per thousand on his original loan. At the end of 3 years he owes the bank $65,000. Since interest rates have risen to 12.5%, the bank will renew the mortgage at this rate, or Cliff can pay the bank $65,000. He decides to renew and will now pay $10.68 monthly per thousand on his loan. (You can ignore the small amount of principal paid during the 3 years.)
i cant figure this out

Answer 1

I'm Unsure, But Here's What I Found.

9.99×65=649.35

10.68×65=694.2

((10.68÷9.99)−1)×100=6.9%

Answer 2

Answer:

The per thousand value of $65000 is $65000/1000=65$

The old monthly payment was = $9.99\times65=649.35$  dollars

Now after renewal, Cliff will now pay $10.68 monthly per thousand on his loan.

Hence, his new monthly payment is = $10.68\times65=694.20$ dollars

The percent increase in his monthly payment will be :

$(\frac{10.68}{9.99}) -1\times100$

= $(1.0690-1)\times100$ = 6.90%