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Question for the Money Doctors

Question submitted on Apr 29, 2019.

Question

1) If I consider a 27 year mortgage loan for $156,975 at an annual interest rate of 8%. If payments are made yearly, how many dollars of the 18th payment will go toward interest?
2) And if I take out a 30 year mortgage for $172,936 at an annual interest rate of 3.2%. How much do I still owe when there is 1 year left on the loan?
Please give me the formula and answer as well. Thank you

Answer

I would not even consider option #1 since the interest rate at 8% is far too high.

Option #2 looks better.

The loan payment is $748.29/month.

Check to see if you can get a lower rate for a 15 year loan.    If you can do this over 15 years, the monthly payment is $1,211.33/month.

Not only do you pay it off in 15 years, you also save $51,345 of interest cost.

There are many loan amortization calculators you can find online.    Your bank may have one on their website.


For additional information visit http://www.360financialliteracy.org/

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