Question

Jim Brown bought a house with a 11.5% adjustable rate mortgage for 20 yearsHe was paying $10.67 monthly per thousand on his original loan. At the end of 4 years he owes the bank $70,000 Interest has now gone up to 13 the bank can renew the mortgage at this rate or Jim can pay the full 70,000 Jim renews the mortgage and will pay $11.72 monthly per thousand on this loan What is the amount of the monthly What the amount of the new payment What is the percent of increase in his new payment

Answer 1

To calculate the amount of the new payment, we need to follow these steps:

Calculate the original loan amount: $10.67 * 1000 = $10,670
Calculate the remaining loan balance after 4 years of payments: $70,000 / (1 + 0.115/12)^(-4*12) = $46,029.35
Calculate the new monthly payment per thousand: $11.72
Calculate the new monthly payment: $11.72 * $46.02935 / 1000 = $539.31
Therefore, the amount of the new monthly payment is $539.31.

To calculate the percent of increase in his new payment, we can compare the new payment to the old payment:

Calculate the old monthly payment per thousand: $10.67
Calculate the old monthly payment: $10.67 * $10,670 / 1000 = $113.85
Calculate the percent increase in the new payment: ($539.31 - $113.85) / $113.85 * 100% = 374.18%
Therefore, the percent of increase in his new payment is 374.18%.