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Exam 13: Loan Amortization: Mortgages

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Question 51

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Cliff and Marcie are refinancing their 20-year mortgage of $250,000 after 10 years. They are reducing the principal amount by $50,000, but keeping the same monthly payment. If interest is 5.5% compounded quarterly, by how much will Cliff and Marcie reduce the amortization period of their mortgage?

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Question 52

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Metro Construction received $60,000 in vendor financing at 10.5% compounded semi-annually for the purchase of a loader. The contract requires semi-annual payments of $10,000 until the debt is paid off. Suppose that the loan permits an additional prepayment of principal on any scheduled payment date. Prepare another amortization schedule that reflects a prepayment of $5,000 with the third scheduled payment. How much interest is saved as a result of the prepayment?

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Question 53

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Jon has a $290,000 mortgage amortized over 20 years at 6.25% compounded quarterly for the first three years. When the mortgage came up for renewal, Jon paid $10,000 towards the principal, and refinanced at 5.8% compounded quarterly. What is Jon's new monthly payment?

A $100,000 mortgage at 6.8% compounded semi-annually with a 25-year amortization requires monthly payments. How much will the amortization period be shortened if payments are increased by 10% starting in the second year and a $10,000 lump payment is made along with the 24^th payment?

Calculate the monthly payment for a $325,000 mortgage at 5.5% compounded quarterly if amortized over 15 and 20 years.

A mortgage contract for $145,000 written 10 years ago is just at the end of its second five-year term. The interest rates were 8% compounded semi-annually for the first term and 7% compounded semi-annually for the second term. If monthly payments throughout have been based on a 25-year amortization, calculate the principal balance at the end of the second term.

A $60,000 loan at 12% compounded semi-annually is to be repaid by monthly payments of $1,000. -What is the size of the final payment?

A home improvement loan is to be repaid by equal monthly payments for six years. The interest rate is 5.4% compounded monthly and the amount borrowed is $33,500. How much interest will the borrower pay during the 4^th year?

A mortgage loan of $102,542 at 6% compounded monthly is amortized by equal monthly payments over 25 years. What is the total amount of interest that would be paid over the entire amortization period?

Lucille borrowed $21,500 for office equipment. The loan requires quarterly payments over two years at 6.5% compounded semi-annually. Construct a full amortization schedule for the loan. Show the total interest paid.

How much principal will be repaid by the first monthly payment of $750 on a $22,000 loan at 15% compounded monthly?

A $60,000 loan at 12% compounded semi-annually is to be repaid by monthly payments of $1,000. -How much will the principal be reduced by payments 13 to 24 inclusive?

A $425,000 mortgage with a 3-year term is amortized over 25 years at an interest rate of 8.2% compounded semi-annually. If payments are made at the end of each month, determine the mortgage balance at the end of the 3-year term.

The Switzers are nearing the end of the first five-year term of a $200,000 mortgage loan with a 25-year amortization. The interest rate has been 4.5% compounded semi-annually for the initial term. How much will their monthly payments increase if the interest rate upon renewal is 7.5% compounded semi-annually?

Erica has a mortgage for $200,000 with a 20-year amortization period and a five-year term at 5.5% compounded quarterly. She makes payments monthly. If Erica renews the full outstanding balance at the end of the five-year term at 6.75% compounded semi-annually, what will be the size of her monthly payment?

Susan has a mortgage for $250,000 with a 20-year amortization period and a three-year term at 6.25% compounded quarterly. She makes payments monthly. Susan has decided to pay a lump sum of $25,000 when her mortgage comes up for renewal. What will be the size of her monthly payment if at the time of renewal, interest is 5.8% compounded annually?

A mortgage loan of $132,000 at 6% compounded semi-annually is to be amortized over 25 years by equal monthly payments. How much interest will be included in the first payment?

Calculate the final monthly payment of a $175,000 20-year mortgage at 5.9% compounded monthly.

A $13,000 loan is to be amortized by equal monthly payments for five years. The interest rate is 12% compounded monthly. -How much will the debtor owe after two years (just after the payment is made at the end of two years) ?

Calculate the monthly payment for a $275,000 mortgage at 5.8% compounded monthly if amortized over 20 and 25 years.