Exam 13: Loan Amortization; Mortgages

Ballard is considering purchasing a condo that will have monthly payments of $950 per month. Property taxes along with heating costs will total $375 per month. His monthly credit card bills total $200 per month and car payments are $700 per month. If Sally's gross monthly income is $6,000 per month, determine his Total Debt Service Ratio.

Dr. Alvano borrowed $8,000 at 10% compounded quarterly to purchase a new X-ray machine for his clinic. The agreement requires quarterly payments during a two-year amortization period. Prepare the full amortization schedule for the loan. Calculate the total interest charges.

A home improvement loan is to be repaid by equal monthly payments for six years. The interest rate is 5.4% compounded monthly and the amount borrowed is $33,500. How much will the borrower still owe after four years?

How much principal will be repaid by the 17^th monthly payment of $750 on a $22,000 loan at 15% compounded monthly?

A $100,000 mortgage loan at 7.2% compounded semi-annually requires monthly payments based on a 25-year amortization. Assuming that the interest rate does not change for the entire 25 years, complete the following table.

Jason purchased a car for $32,000 and arranged the monthly financing at 6.85% compounded semi-annually over five years. Two years later, he received an inheritance and decided to pay the loan balance in full. How much did Jason owe?

The Tarkanians can afford a maximum mortgage payment of $1,000 per month. What is the maximum mortgage loan they can afford if the amortization period is 25 years and the interest rate is: a) 5.5% compound semi-annually? b) 6.5% compounded semi-annually? c) 7.5% compounded semi-annually?

The interest rate for the first five years of a $27,000 mortgage loan was 7.25% compounded semi-annually. The monthly payments computed for a 10-year amortization were rounded to the next higher $10. a) Calculate the principal balance at the end of the first term. b) Upon renewal at 6.75% compounded semi-annually, monthly payments were calculated for a 5-year amortization and again rounded up to the next $10. What will be the amount of the last payment?

An annuity paying $1400 at the end of each month (except for a smaller final payment) was purchased with $225,000 that had accumulated in an RRSP. The annuity provides a semi-annually compounded rate of return of 5.2%. a) What amount of principal will be included in Payment 137? b) What will be the interest portion of Payment 204? c) How much will the principal be reduced by Payments 145 to 156 inclusive? d) How much interest will be paid in the twentieth year? e) What will be the final payment?

The Switzers are nearing the end of the first five-year term of a $200,000 mortgage loan with a 25-year amortization. The interest rate has been 4.5% compounded semi-annually for the initial term. How much will their monthly payments increase if the interest rate upon renewal is 7.5% compounded semi-annually?

A mortgage loan of $132,000 at 6% compounded semi-annually is to be amortized over 25 years equal monthly payments. How much interest will be included in the first payment?

Finch wishes to sell a closed mortgage contract just after receiving the 29^th payment. The original loan was for $60,000 at 11% compounded semi-annually for a five-year term. Monthly payments are being made on a 25-year amortization schedule. What price can she reasonably expect to receive if the current semi-annually compounded interest rate on two and three-year term mortgages is: a) 10%? b) 12%?

The Graftons can afford a maximum mortgage payment of $1,000 per month. The current interest rate is 5.2% compounded semi-annually. What is the maximum mortgage loan they can afford if the amortization period is: a) 15 years? b) 20 years? c) 25 years? d) 30 years?

After two years of the first five-year term at 6.7% compounded semi-annually, Dan and Laurel decide to take advantage of the privilege of increasing the payments on their $110,000 mortgage loan by 10%. The monthly payments were originally calculated for a 25-year amortization. a) How much will the amortization period be shortened? b) What will be the principal balance at the end of the five-year term?

A $67,800 loan is to be repaid by equal annual payments for 15 years. The interest rate is 8.3% compounded annually. How much interest will be included in the first payment?

A $425,000 mortgage with a 3-year term is amortized over 25 years at an interest rate of 8.2% compounded semi-annually. If payments are made at the end of each month, determine the mortgage balance at the end of the 3-year term.

A $33,950 loan at 10.6% compounded semi-annually is to be paid off by a series of $4,000 payments that will be made at the end of every six months. How much of the first payment will be credited towards reduction of the principal?

Grace is analyzing her company's purchase of a new $45,000 machinery. The machinery was purchased through financing at 6.7% compounded quarterly. The company makes quarterly payments over 7 years to pay off this loan. Determine the amount of the principal that had been paid off at the end of year 3 through the quarterly payments.

The Archibalds are eligible for Canada Mortgage and Housing Corporation's Mortgage Loan Insurance. Consequently, their limits are 95% for the loan-to-value ratio, 35% for the GDS ratio, and 42% for the TDS ratio. a) Rounded to the nearest $100, what is the maximum 25-year mortgage loan for which they can qualify if their gross monthly income is $5,000 and their payments on personal debt amount to $600 per month? Assume monthly heating costs of $100 and property taxes of $175 per month. Current mortgage rates are 6.6% compounded semi-annually. b) If they make the minimum down payment, what is the maximum price (rounded to the nearest $100) they can pay for a home? (Assume the purchase price equals the appraised value.)

Sally is considering purchasing a condo that will have monthly payments of $800 per month. Property taxes along with heating costs will total $225 per month. Her monthly credit card bills total $150 per month and her car payments are $600 per month. If Sally's gross monthly income is $3,500 per month, determine her Gross Debt Service Ratio.