Question

Since they filed bankruptcy in the past, a couple ends up paying a 12% fixed rate for a 30 year mortgage. With a better credit rating, they could have gotten the loan at a rate of 8%. If their loan amount is $140,000, how much more per month will the couple be paying for their mortgage as a result of their bankruptcy?

Answer 1

✅ b. $412.79

i got it right ⬇️

Answer 2

Monthly payment = $1,402.65

Step-by-step explanation:

Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.

The monthly equal installment is calculated as follows:

Monthly equal installment= Loan amount/Monthly annuity factor

Loan amount = 140,000

Monthly annuity factor =

=( 1-(1+r)^(-n))/r

r- Monthly interest rate (r)

= 12/12= 1%

n- Number of months ( n) = 30 × 12= 630

Annuity factor

= ( 1- (1.01)^(-630)/0.01= 99.8105

Monthly installment= 140,000 /99.8105 = $1,402.65

Monthly installment = $1,402.65

Monthly payment = $1,402.65