Question

You want to take out a $144,000 mortgage (home loan). The interest rate on the loan is 6.2%, and the loan

is for 30 years. Your monthly payments are $881.96. How much will still be owed after making payments for
10 years? Round your answer to the nearest dollar.

Answer 1

$121,144

Explanation:

A financial calculator is useful for this. Supply the given numbers, and it will tell you the future value of the loan after 120 payments.

__

You can calculate the amount by hand using the formula ...

FV = P(1 +r/12)^(12t) -12A((1+r/12)^(12t) -1)/r

For P = 144,000, r = 0.062, t = 10, A = 881.96, this is ...

FV = 121,144.12 ≈ 121,144