What is your monthly mortgage payment

Reference no: EM132187675

Problem - Mortgage Financing

(a) You borrowed an amount P₀ on a 30-year mortgage at r annual interest rate compounded daily. What is your monthly mortgage payment M₃₀?

(b) Your employer pays you on a biweekly schedule instead of on a monthly schedule. You want to make a mortgage payment every two weeks in the amount of M₃₀/2. How many years sooner can you finish paying off your mortgage? Your answer should be independent of P₀.

(c) Now suppose you borrowed P₀ on a 15-year mortgage at r annual interest rate compounded daily. What is your monthly mortgage payment M₁₅?

(d) How much less do you pay for the house overall with the mortgage in (c) compared to the mortgage in (a)?

Reference no: EM132187675

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