Question

karen is financing 291,875 to purchase a house. she obtained a 15/5 balloon mortgage at 5.35%. what will her balloon payment be?

Answer 1

please help

Answer 2

1) Calculate the monthly payment for a 15 year mortgage of $291,875 at 5.35% annual interest.

2) Let's see step one, first.

Answer 3

i did ant i got 2369.40

Answer 4

Odd. Why is that a little too much? You're about $7 high.

Answer 5

hmm my calculator stinks. what answer are you getting?

Answer 6

What settings did you use?

Should be
n = 180
pv = 291875
i = 0.0535.
m = 12
fv = 0
Type = End of Period

You may have no "m" and you will need to supply the monthly "I" by yourself.

I = 0.0535 / 12 = 0.00445833...

Answer 7

ok im confused. my choices are,
220,089.34
219112.46
246181.39
230834.98

Answer 8

I chose the first one.

Answer 9

Calculate that payment. Don't give up and start staring at the answers. The right answer IS in there.

Answer 10

so... i got 2.260775957. I am using the balance formula for balloon payment but its not working

Answer 11

What is 2.260775957? You need that payment. Keep at it until you get the correct: $2,361.69

Answer 12

ok that isnt one of the answer choices and what kind of calculator do you have?

Answer 13

I don't have a calculator, per se. I don't normally use built in functions. I don't expect you to be able to do that, however.

The payment is clearly not the answer to a problem that requires a balance. You need the correct payment, then you can do anything.

1) Calculate the monthly payment for a 15 year mortgage of $291,875 at 5.35% annual interest. $2,361.69

2) Calculate the mortgage amount for a 10 year mortgage as 5.35% annual interest, paying $2,361.69 monthly.

Answer 14

ok so when i use the balloon formula im going to use 2361.69 for the m
the i is going to be 0.0535 and the t is going to be 15 years?

Answer 15

?? Please state the "Balloon Formula". Let's see if we can make sense of it.

Answer 16

That makes no sense at all.

Annual Accumulation of the original Sum: \(291875\cdot (1.0535)^{5}\)

Monthly Accumulation of Payments: \(2361.69\cdot\dfrac{\left(1 + \dfrac{0.0535}{12}\right)^{60} - 1}{\left(\dfrac{0.0535}{12}\right)}\)

Now subtract.

You DO have to know what all the parts mean.

Answer 17

ok i got 160205.83. now what would i subtract?

Answer 18

For which piece? Annual accumulation of value or monthly accumulation of payments?

Answer 19

monthly accumalation for anual i got 378764.7878. then i would subtract the 160205.83. which gives me 21558.9578

Answer 20

Except that 160205.83 is incorrect. Try that one again.

Answer 21

The first piece is also wrong. This interest is compounded monthly. Why are we accumulating the value annually?

\(291875\cdot\left(1 + \dfrac{0.0535}{12}\right)^{60} = 381164.519935256\)

Answer 22

so how is this answer correct? It's not one of my choices and just doesn't make sense to me... @tkhunny @50shadesofchocolate