### 6.3 Home Mortgages

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• 7. Amortization Schedules

Use a spreadsheet. (See Example 3.)

You take out a home mortgage for \$238,000 for 30 years at 5%. Each month, you make the regular payment of \$1277.64 plus an additional \$60.

1. How much sooner do you pay off the mortgage?
2. How much do you save in interest?

• Worked-Out Solution
1. Use a spreadsheet to create an amortization schedule showing the effect of the additional monthly payment of \$60.

You will pay your mortgage off in 326 months. This is months earlier than if you make the regular payments.

2. By making the regular monthly payments, you would pay

With the additional payment of \$60 per month, you will pay

So, you willl save

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```   _____     ___      ______    _____    _    _
/ ___//   / _ \\   /_____//  |  ___|| | \  / ||
\___ \\  / //\ \\  `____ `   | ||__   |  \/  ||
/    // |  ___  || /___//    | ||__   | .  . ||
/____//  |_||  |_|| `__ `     |_____|| |_|\/|_||
`-----`   `-`   `-`  /_//      `-----`  `-`  `-`
`-`
```
• 8. Amortization Schedules

Use a spreadsheet. (See Example 3.)

You take out a home mortgage for \$260,000 for 30 years at 6%. Each month, you make the regular payment of \$1558.83 plus an additional \$100.

1. How much sooner do you pay off the mortgage?
2. How much do you save in interest?

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.

``` __   _     ______   _    _     ______
| || | ||  /_   _// | || | ||  /_   _//   ____
| '--' ||   -| ||-  | || | ||   -| ||-   |    \\
| .--. ||   _| ||_  | \\_/ ||   _| ||_   | [] ||
|_|| |_||  /_____//  \____//   /_____//  |  __//
`-`  `-`   `-----`    `---`    `-----`   |_|`-`
`-`
```
• 9. Amortization Schedules

Use a spreadsheet. (See Example 3.)

You take out a home mortgage for \$275,000 for 25 years at 4%.

1. What is the least amount, to the nearest dollar, that you need to pay in addition to the regular payment to pay off the mortgage 5 years early?
2. Compare the total interest you pay for the 25-year mortgage to the total interest you pay when you pay off the 25-year mortgage 5 years early.

• Worked-Out Solution

If you pay this amount each month your mortgage will be paid off in 25 years (or 300 months). Using a spreadsheet and "trial and error," you can see that you need to make additional payments of \$215 to pay the mortgage off 5 years earlier.

2. By making the regular monthly payments, you would pay

With the additional payment of \$215 per month, you will pay

So, you will save

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.

```  ______    ______   _    _     ______  __    __
/_____//  /_   _// | |  | ||  /_   _// \ \\ / //
`____ `    -| ||-  | |/\| ||   -| ||-   \ \/ //
/___//     _| ||_  |  /\  ||   _| ||_    \  //
`__ `     /_____// |_// \_||  /_____//    \//
/_//      `-----`  `-`   `-`  `-----`      `
`-`
```
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• 10. Amortization Schedules

Use a spreadsheet. (See Example 3.)

You take out a home mortgage for \$190,000 for 20 years at 5%.

1. What is the least amount, to the nearest dollar, that you need to pay in addition to the regular payment to pay off the mortgage 5 years early?
2. Compare the total interest you pay for the 20-year mortgage to the total interest you pay when you pay off the 20-year mortgage 5 years early.
3. Compare the total interest you pay for a 15-year mortgage for the same amount and at the same rate to the total interest you pay when you pay off the 20-year mortgage 5 years early.

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.

```  _____     ______   ______     ______   _    _
/  ___||  /_   _// |      \\  /_   _// | || | ||
| // __     -| ||-  |  --  //   -| ||-  | || | ||
| \\_\ ||   _| ||_  |  --  \\   _| ||_  | \\_/ ||
\____//   /_____// |______//  /_____//  \____//
`---`    `-----`  `------`   `-----`    `---`

```
• 11. Balloon Mortgages

Use a spreadsheet. (See Example 4.)

You take out a 5-year balloon mortgage for \$150,000. The monthly payment is equal to that of a 15-year mortgage with an annual percentage rate of 5%. Find the balloon payment and the total interest that you pay.

• Worked-Out Solution

Making this monthly payment for 5 years produces the following spreadsheet.

The balloon payment is \$111,835.67. You will pay a total interest of \$33,007.07.

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.

```           _    _               ______    _____
____    | || | ||     ___    /_   _//  /  ___||
|    \\  | || | ||    /   ||   -| ||-  | // __
| [] ||  | \\_/ ||   | [] ||   _| ||_  | \\_\ ||
|  __//   \____//     \__ ||  /_____//  \____//
|_|`-`     `---`       -|_||  `-----`    `---`
`-`                     `-`
```
• 12. Balloon Mortgages

Use a spreadsheet. (See Example 4.)

You take out a 7-year balloon mortgage for \$120,000. The monthly payment is equal to that of a 30-year mortgage with an annual percentage rate of 5.5%. Find the balloon payment and the total interest that you pay.

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.

``` _    _    __   __   _____      _____     _____
| |  | ||  \ \\/ // |  __ \\   |  ___||  /  ___||
| |/\| ||   \ ` //  | |  \ ||  | ||__   | // __
|  /\  ||    | ||   | |__/ ||  | ||__   | \\_\ ||
|_// \_||    |_||   |_____//   |_____||  \____//
`-`   `-`    `-`'    -----`    `-----`    `---`

```