Question

Seven years ago, Raymond purchased a $197,000 home with a 30-year mortgage at 4.15%. Having recently lost his job, he can no longer afford to make his mortgage payments. If he currently owes $170,118.49 and his lender offered to extend the loan by 7 years at 4.05%, what will be his new mortgage payment?

Answer 1

Answer: does anybody know?

Step-by-step explanation:

Answer 2

Answer:

Ans. His new mortgage payments will be $9,897.78 per year.

Step-by-step explanation:

Hi, well, his lender extended the period of payment for 7 more years, this mean that he is back where he started in terms of time, in other words, he has 30 years again to pay, only this time he has to pay $170,118.49 instead of $190,000. Notice that the interest rate dropped to 4.05%, so we need to use the following formula and solve for "A".

$Present Value=\frac{A((1+r)^{n}-1) }{r(1+r)^{n} }$

Where

Present Value=170,118.49

A= annual payments

r=interest rate (from now on, 4.05%)

n= periodic payments to be made (in our case, 30)

Let´s solve for A

$170,118.49=\frac{A((1+0.0405)^{30}-1) }{0.0405(1+0.0405)^{30} }$

$170,118.49=A(17.1875375)$

$A=\frac{170.118.49}{17.1875375}$

$A=9,897.78$

So, he will have to make annual payments of $9.897.78

Best of Luck