Answered

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Abby and Jason are building a new house. They obtained a construction loan of $100,000, which will be rolled over into a conventional 20-year mortgage when the house is complete in 14 months. Simple interest rate of 0.5% per month will be charged on the construction loan. The 20-year mortgage will carry a 6% interest rate with monthly payments (so, it is compounded monthly). What is the monthly payment that Abby and Jason will make

Sagot :

anthougo

Answer:

Abby and Jason

The monthly mortgage payment that Abby and Jason will make is:

= $766.58.

Explanation:

a) Data and Calculations:

Construction loan = $100,000

Period of construction = 14 months

Simple interest rate = 0.5% per month

Principal amount after 14 months = $ 107,000 ($100,000 * 0.5% * 14)

Mortgage loan = $107,000

Mortgage period = 20 years

Interest rate = 6% compounded monthly

Terms of payment = monthly

From an online financial calculator, the monthly payment for the mortgage will be:

Monthly Pay = $766.58

                                         Monthly    Total

Mortgage Payment         $766.58   $183,979.50  

Total of 240 Mortgage Payments = $183,979.50

Total Interest = $76,979.50

Mortgage Payoff Date Mar. 2041 if the mortgage commenced on March 1, 2021.

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