Question

Jane is considering a 7/23 balloon mortgage with an interest rate of 4.15% to

purchase a house for $197,000. What will be her monthly payment for the first


7 years of the balloon mortgage?


O A. $945.98


O B. $933.64


O c. $900.00


O D. $957.62

Answer 1

957.62

Explanation:

Given the house price, P=$197,000,
`n=12* 30=360, i=0.0415/12`, the monthly payments, M, can be calculated as:

`M=P[(i(1+i)^n)/((1+i)^(360)-1)]\\\\M=[((0.0415)/(12)(1+(0.0415)/(12))^360)/((1+(0.0415)/(12))^(360)-1)]\\\\M=957.62`

Hence, the monthly payment of the baloon mortgage is $957.62