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

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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 = MA**	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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