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In purchasing a house that is worth $175,000, you need to obtain a mortgage. Suppose you...

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Finance

In purchasing a house that is worth $175,000, you need to obtaina mortgage. Suppose you choose a 30year fixed rate mortgage with aninterest rate/year of 9.74%. What is the annual payment required?How much of each year's payment goes to paying interest and howmuch to reducing the principal balance for the first 15 years?

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3.8 Ratings (537 Votes)

Annual rate(M)= yearly rate/1= 9.74% Annual payment= 18162.44
Year Beginning balance (A) Annual payment Interest = M*A Principal paid Ending balance
1 175000.00 18162.44 17045.00 1117.44 173882.56
2 173882.56 18162.44 16936.16 1226.28 172656.27
3 172656.27 18162.44 16816.72 1345.72 171310.55
4 171310.55 18162.44 16685.65 1476.80 169833.76
5 169833.76 18162.44 16541.81 1620.64 168213.12
6 168213.12 18162.44 16383.96 1778.49 166434.63
7 166434.63 18162.44 16210.73 1951.71 164482.92
8 164482.92 18162.44 16020.64 2141.81 162341.12
9 162341.12 18162.44 15812.02 2350.42 159990.70
10 159990.70 18162.44 15583.09 2579.35 157411.35
11 157411.35 18162.44 15331.87 2830.58 154580.77
12 154580.77 18162.44 15056.17 3106.28 151474.49
13 151474.49 18162.44 14753.62 3408.83 148065.67
14 148065.67 18162.44 14421.60 3740.85 144324.82
15 144324.82 18162.44 14057.24 4105.21 140219.61
16 140219.61 18162.44 13657.39 4505.05 135714.56
17 135714.56 18162.44 13218.60 4943.85 130770.71
18 130770.71 18162.44 12737.07 5425.38 125345.34
19 125345.34 18162.44 12208.64 5953.81 119391.53
20 119391.53 18162.44 11628.73 6533.71 112857.82
21 112857.82 18162.44 10992.35 7170.09 105687.73
22 105687.73 18162.44 10293.98 7868.46 97819.27
23 97819.27 18162.44 9527.60 8634.85 89184.42
24 89184.42 18162.44 8686.56 9475.88 79708.54
25 79708.54 18162.44 7763.61 10398.83 69309.71
26 69309.71 18162.44 6750.77 11411.68 57898.03
27 57898.03 18162.44 5639.27 12523.18 45374.86
28 45374.86 18162.44 4419.51 13742.93 31631.93
29 31631.93 18162.44 3080.95 15081.49 16550.43
30 16550.43 18162.44 1612.01 16550.43 0.00
Where
Interest paid = Beginning balance * Annual interest rate
Principal = Annual payment – interest paid
Ending balance = beginning balance – principal paid
Beginning balance = previous Year ending balance

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Transcribed Image Text

In purchasing a house that is worth $175,000, you need to obtaina mortgage. Suppose you choose a 30year fixed rate mortgage with aninterest rate/year of 9.74%. What is the annual payment required?How much of each year's payment goes to paying interest and howmuch to reducing the principal balance for the first 15 years?

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