Katelyn is financing $368,375 to purchase a house. She obtained a 20/6 balloon mortgage at 4.65%. What will her balloon payment be?

Question

Jamar Glover

Mathematics

12 November, 21:15

Katelyn is financing $368,375 to purchase a house. She obtained a 20/6 balloon mortgage at 4.65%. What will her balloon payment be?

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Juicy · Answer 1

Katelyn's balloon payment will be $127, 619.33.

We have PV (present value) of $368, 375 to be paid in 240 months (20 years, indicated by 20/6) with a mortgage at 4.65% (Annual Interest rate) to be converted into monthly interest rate (4.65/12 = 0.3875%).

Using the formula:

P (Balloon) = (PV) (1+r) ^n - P[ ((1+r) ^n-1) / r) ]

Balloon payment is the amount that has a term that is shorter than its amortization.