Question

I need help asap on finance questions!

Answer 1

@xapproachesinfinity would you happen to be able to help with finance questions? Dennis and Darla have a 15/6 balloon mortgage for $178,800 with a rate of 3.95%. How much will they pay in interest over the life of the loan?

Answer 2

i would help but some wording are difficult to me
what does balloon mean

Answer 3

balloon is the type of mortgage where you pay a fixed rate and then at the end you pay a large amount to cover the balance? or something along those lines.

Answer 4

I am not quite sure :/

Answer 5

Ohhh, hold on.

Answer 6

understanding the problem is half the answer

Answer 7

So the 15 means that the beginning fixed monthly payments are going to be calculated as if they would be payed off in 15 years. the 6 means that the payments will be made for 6 years.

Answer 8

I know and i dont exactly understand it so i was looking for some help.

Answer 9

over the life of the loan? how many years would that be

Answer 10

this requires knowing the time

Answer 11

i believe the time is 6 years

Answer 12

there is no i believe in math

Answer 13

there is only yes or no

Answer 14

nevermind, its 15. t=15

Answer 15

15 years ?

Answer 16

yes.

Answer 17

ok, were you given this in the problem

Answer 18

no, the only thing i am given is what i put up top

Answer 19

that is why i said I believe, i am not sure how these problems work.

Answer 20

first the principal is P=178800
after a year you will be paying 178800+178800x(3.95/100)
if you continue like this
15 years later you will be paying 178800(1+3.95/100)^15

Answer 21

that the total of you pay for mortgage in 15 years period

Answer 22

but i believe you 15/6 means you will pay in 6 years what you would have paid in 15 years

Answer 23

so divide 15/6
what you will pay then becomes 178800(1+3.96/100)^(15/6)

Answer 24

hmm okay wait, so i divide 15/6? that gives me 2.5

Answer 25

i dont think i am doing it right, my answer is 196983?

Answer 26

what did you do?

Answer 27

i plugged that equation into wolfram alpha

Answer 28

seems good
now subtract 178800 from that

Answer 29

I get 178,183

Answer 30

how come?

Answer 31

you made an error

Answer 32

i just subtracted it..

Answer 33

oh wait, 18183?

Answer 34

yep

Answer 35

but that cant be my answer, what do i do next?

Answer 36

you have answer choices?

Answer 37

Yes, the correct answer was 36,132.26.