anonymous
  • anonymous
Joshua finances $512,300 with a 30/11 balloon mortgage at 4.7%. How much will he pay for principal and interest over the life of the loan?
Finance
  • Stacey Warren - Expert brainly.com
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SOLVED
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schrodinger
  • schrodinger
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anonymous
  • anonymous
@ganeshie8 @whpalmer4
anonymous
  • anonymous
just help me set up the problem adn ill try to figure out the answer
whpalmer4
  • whpalmer4
Okay, I'm not sure what a 30/11 balloon means — is that 30 year loan, but balloon due after 11 years?

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whpalmer4
  • whpalmer4
Ah, I think that means the loan amortization is calculated as if a 30 year loan, but after 11 years the remaining balance is due in the final balloon payment. So, calculate an amortization table for a 30 year loan, 4.7% APR. Total up the interest paid in the first 11*12-1 = 131 payments. Then total up the principal paid in those payments along with the remaining balance.
anonymous
  • anonymous
can u set it up for me in a formula?
anonymous
  • anonymous
in an equation?
whpalmer4
  • whpalmer4
Sorry, I don't have a formula for you. There are online calculators which will do it for you, or you can use a spreadsheet, or maybe someone has a formula...
anonymous
  • anonymous
oh
anonymous
  • anonymous
do u have i guess for this question?
anonymous
  • anonymous
have choices
whpalmer4
  • whpalmer4
what are the choices, we can see if I figured it out correctly :-)
anonymous
  • anonymous
okay ill poest em A:$750,869.29
anonymous
  • anonymous
B:752,436.54
anonymous
  • anonymous
C:956,512.80
anonymous
  • anonymous
D:536,378.10
anonymous
  • anonymous
you got it?
anonymous
  • anonymous
Hello?
whpalmer4
  • whpalmer4
ah, yes, I did get one of those. made a mistake in my arithmetic the first time, though, so it didn't look like I did, had to redo it!
whpalmer4
  • whpalmer4
you can clearly rule out D, as you're going to pay $512,300 in principal and that only leaves 24,000 and change for interest, which is clearly too low for use of half a million for 11 years! C also seems safe to rule out, as a rule of thumb is that a 30 year mortgage costs you about as much in interest as principal, and we are skipping 19 years of interest by doing the balloon payment. to choose between A and B, though, you need to do the math, or be a lucky guesser...
whpalmer4
  • whpalmer4
Ah, found a formula for you: http://www.financeformulas.net/Loan_Balloon_Balance.html You'll need to figure out the regular payment to use it, but you should know how to do that, I hope. If not, you should be able to find it at that site, or in your course materials.

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