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hotpotato |
07/17/05 |
can you give me some clues and help in this problem?
Your sister purchased her first new home in Whitby for $ 454,000. She finalized her down payment to be 18% of the home price, where the remaining balance would be financed from ICICIZ Bank. The mortgage has a 25-year amortization period and a 5-year term. The interest rate on the mortgage was 6.8%. She will be making regular bi-weekly (every 2 weeks) payments. From work, your sister expects to receive a big bonus from time to time. Therefore, she would rather put that extra cash towards the mortgage, instead of the usual shopping spree at Whitby Waterfalls Mall. She is going to make additional lump sum payments of $8,000 every year for the first 3 years and $7,500 for the last 2 years of the term.
a) Draw and label a detailed timeline. What is her bi-weekly mortgage payment amount?
b) In addition to her weekly payments, taking into account all the lump-sum cash payments from her bonus, how much will she owe on her mortgage at the end of the 5-year term? How much interest would she have paid by the end of 5 years?
c) If she makes those “balloon / bullet” payments over the 5 years with her regular mortgage schedule, how many bi-weekly payments can she save to pay-off the mortgage from the initial 25 years? |
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