Question

Twyla and Tony have a 30/5 balloon mortgage for $389,900 with a rate of 4.85%. How much will they pay in interest over the life of the loan?

Answer 1

I just need help trying to figure out how someone would solve this...

Answer 2

a 30 year mortgage that is paid on if 5 years, then the balance is due

Answer 3

there is a formula i tend to use for finding stuff like this\[B_n=B_o(k)^n-P~\frac{1-(k)^n}{1-(k)}\]
since its a 30 year loan, and i assume its monthly payment; 30*12 = 360, n= 360

\[0=B_o(k)^{360}-P~\frac{1-(k)^{360}}{1-(k)}\]
\[B_o(k)^{360}\frac{1-(k)}{1-(k)^{360}}=P\]

i use k to clean up it up; but k = 1+r/12 in this case
\[k=1+\frac{.0485}{12}\approx 1.00404\]
\[B_o(1.00404)^{360}\frac{1-(1.00404)}{1-(1.00404)^{360}}=P\]
\[B_o(1.00404)^{360}\frac{.00404}{1-(1.00404)^{360}}=P\]

and for the wolf that would look like:

389900(1.00404)^(360) (.00404)/(1-(1.00404)^(360))

http://www.wolframalpha.com/input/?i=389900%281.00404%29%5E%28360%29+%281-1.00404%29%2F%281-%281.00404%29%5E%28360%29%29

so payments of 2057 a month

Answer 4

so the question is, how much has been paid in 5 years, how much of the balance is left, and the workings of that should determine the interest paid

Answer 5

I know how much there was monthly, because I'm sure that has some to do with the problem, I just don't know where to go from there.

Answer 6

im just doing some thinking here to see how close i come

\[B_{72}=B_o(k)^{72}-2057~\frac{1-(k)^{72}}{1-(k)}\]\[~~~~~=349,731\]
thats how much we would have left to pay off, thats the balloon payment

how much have we paid so far?

72 * 2057 = 148,104, entotal.

to find how much that was in principal, i would take the difference between the loan amount and the balance

389,900
- 349,741
-----------
40,259 ; thats the principal paid, the rest is interest


148,104
-40,259
--------
107,845

Answer 7

if you know your payment amount, how much is it?

Answer 8

The only info I have is what shows in the question, and the answer options. Would it help if I attached the answer options?