You need a 35-year, fixed-rate mortgage to buy a new home for $295,000. Your mortgage bank will lend you the money at an APR of
5.9 percent. However, you can only afford monthly payments of $1,350, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at $1,350
1 answer:
Answer:
$434,780.69
Explanation:
The computation of the large the ballon payment would be is determined by using the future value formula i.e. to be shown in the attachment
Provided that
Present value = $295,000
Rate of interest = 5.9% ÷ 12 months = 0.49166%
NPER = 35 years × 12 months = 420 months
PMT = $1,350
The formula is shown below:
= -FV(Rate;NPER;PMT;-PV;type)
So, after applying the above formula, the future value is $434,780.69
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