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Question ( mortgage problem) (Try to work this question WITHOUT using Excel, get calculation in detail) You...

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Question ( mortgage problem) (Try to work this question WITHOUTusing Excel, get calculation in detail)

You are considering the purchase of a $500,000 home. You plan totake a 30-year fixed mortgage after making a 20% downpayment toavoid PMI. Payments are to be made monthly (at the end of themonth) and the APR is 8%.

  1. What is the monthly payment?

  2. During what month does the principal portion first exceed theinterest portion? Are you surprised by your answer?

  3. How long does it take to pay off your mortgage if you pay anadditional $300 towards principal each payment?

  4. How long does it take to pay off your mortgage if you pay anadditional amount each month equal to the current month’sprincipal?

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