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Marks MR X is planning to get a Mortgage on Jan 1, 2022 and the first payment will be made next month beginning. with the following information Payments are monthly. 1 Calculate the monthly payment and Amortization Schedule. Year 40 2 How much interest Mr X will be able to save if he goes for a Mortgage valued 500000 Int rate (Annual) 5% 3 At what payment , the outstanding balance is less than 50% of total loan. Loan Value 750000

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Final answer:

To calculate the monthly payment and amortization schedule, we can use the formula for the monthly payment of a mortgage. For a $500,000 mortgage with a 5% annual interest rate and a 40-year term, the monthly payment is $2,998.93. If Mr. X were to pay cash for the house instead, he would save $439,781.40 in interest. The payment at which the outstanding balance is less than 50% of the total loan is when the outstanding balance reaches $374,366.95.

Step-by-step explanation:

To calculate the monthly payment and amortization schedule, we can use the formula for the monthly payment of a mortgage:

P = (PV × r) / (1 - (1 + r)^(-n))

In this formula, P is the monthly payment, PV is the loan value, r is the monthly interest rate (annual interest rate divided by 12), and n is the number of months.

For the first question, let's calculate the monthly payment:

PV = $500,000

Annual interest rate = 5%

Monthly interest rate = 5% / 12 = 0.4167%

n = 40 years × 12 = 480 months

Plugging these values into the formula, we get:

P = ($500,000 × 0.004167) / (1 - (1 + 0.004167)^(-480))

P = $2,998.93

So, the monthly payment for a $500,000 mortgage with a 5% annual interest rate and a 40-year term is $2,998.93.

For the second question, let's calculate the amount of interest saved if Mr. X goes for a mortgage valued at $500,000:

Total interest paid = P × n - PV

Total interest paid = $2,998.93 × 480 - $500,000

Total interest paid = $439,781.40

If Mr. X were to pay cash for the house instead, he would save $439,781.40 in interest.

For the third question, let's find the payment at which the outstanding balance is less than 50% of the total loan:

Outstanding balance = Total loan value × (1 - (1 + r)^(-n))

Outstanding balance = $750,000 × (1 - (1 + 0.004167)^(-480))

Outstanding balance = $374,366.95

To find the payment, we need to check the amortization schedule for each monthly payment.

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