Question

Please Help Im so confused!
Jessie and Bob are financing $425,500 to purchase a house. They obtained a 30/8 balloon mortgage at 6.55%. What will their balloon payment be?

$379,659.89

$637,130.99

$357,491.39

$380,040.19
The monthly payment is 2700 but not sure where to go from there

Answer 1

@phi

Answer 2

@TuringTest

Answer 3

@thomaster

Answer 4

I found a complicated formula. First can you find the future value, using
FV= PV (1+r)^n
?
(or whatever version you have learned)

Answer 5

I have to find the monthly formula and then do something with balance formula and that where I'm stuck at.

Answer 6

Does this look familiar?

Answer 7

how many months before the balloon payment is due ?

Answer 8

I found the balance formula it is...

Answer 9

Well 8 year until its due

Answer 10

Just making sure. 8 years= 96 months.

In your equation, what is n*t (I think that is 96 ?)

Answer 11

n=12 because the months and t=8 so yes its 96

Answer 12

and what is m ?

Answer 13

I think its the months payed off? Im not sure

Answer 14

Thank you for your help by the way!

Answer 15

so m is 96 ?
then n*t is 12*30 = 360 ?

Answer 16

That would make sense I think I'm not sure

Answer 17

and what is P in your equation?

Answer 18

The principal

Answer 19

The monthly payment multiplied by the monthly payment were made?

Answer 20

ok, I assume i is 0.0655/12 (interest per month) = 0.00545833
and 1+i is 1.00545833

Answer 21

Yes it is

Answer 22

did they give you the monthly payment or did you figure it out ?

Answer 23

I keep getting a number around 377,xxx
which does not match any of your choices.

Answer 24

I figured it out

Answer 25

what did you get ?

Answer 26

2731.56

Answer 27

for the monthly payment ?

Answer 28

Yes

Answer 29

I used your first formula

P* (i * (1+i)^360 )/((1+i)^360 - 1)
and got this
http://www.wolframalpha.com/input/?i=425500*+%28r+*+%281%2Br%29%5E360+%29%2F%28%281%2Br%29%5E360+-+1%29+where+r%3D+0.0655%2F12

Answer 30

Oh okay I might have rounded wrong or something! Where do I go from here?

Answer 31

I am still confused. The formula I found (with google) gives this answer
http://www.wolframalpha.com/input/?i=425500*%281%2Br%29%5E96+-+2703.46*%28+%281%2Br%29%5E96+-+1%29%2Fr+where+r%3D+0.0655%2F12

Answer 32

Me too I dont understand do you think it might be the one closet to it?

Answer 33

your formula gives the answer
377598.83
http://www.wolframalpha.com/input/?i=425500*+%28+%281%2Br%29%5E360+-+%281%2Br%29%5E96+%29%2F%28++%281%2Br%29%5E360+-1%29+where+r%3D+0.0655%2F12
(It rounded to 377599)

which matches the first formula (close enough)

Answer 34

maybe the last payment (the ballon payment) is the amount due plus the regular payment
377598.83 + 2703.46= 380302.29

Answer 35

well I had the question before and I thought that was the answer but it was wrong so maybe it is the 379,659

Answer 36

Yes, I am (pretty) sure it is one of those 2 choices. But I would like to see how you calculate the exact number.

Answer 37

Me too im taking an online class and it does not explain it well at all.

Answer 38

This might be it. The balloon payment is 377598.83 (using your formula)
now add on the interest due on that amount for one month
377598.83*1.00545833= 379,659.89
which matches the first choice.

Answer 39

That makes sense thank you! When I submitted Ill let you know if it was right or wrong. Thank you so much for your help I REALLY appreciate it!

Answer 40

can you figure out the balloon part (how to find 377598.83 )? I typed the formula into wolfram, but they may want you to show your own work.

Answer 41

You just use the formula and fill it in with the numbers we discussed right? If that then yes I understand

Answer 42

ok, good luck.

Answer 43

Thanks again