Answer:
$279.98
Step-by-step explanation:
A 20/6 balloon payment means loan amortization is for 20 years and constant payments is for 6 years after which balloon payment is due.
The formula to calculate her constant payments based on a 15 year amortization plan is
A= P × r × r(1+r)^n/(1+r)^n-1
Where A = constant monthly payments for the 6 year period
r= interest rate
P= mortgage value loan
n= number of months =20×12=240 payments
Substitute values in the formula:
A= $155000× 0.0425×0.0425(1+0.0425)^240/(1+0.0425)^240-1
A= $279.98
To calculate what she would pay before balloon payment is due, we simply multiply her monthly payments $279.98 by number of payments 240
