Asked by Rhetori Thompson on Jun 17, 2024
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A $100,000 mortgage at 7.3% compounded semi-annually with a 25-year amortization requires monthly payments. The mortgage allows the borrower to miss a payment once each year. How much will the amortization period be lengthened if the borrower misses the 12th payment? (The interest that accrues during the 12th month is converted to principal at the end of the 12th month.)
Compounded Semi-annually
Compounded semi-annually refers to the calculation of interest where the principal amount is credited with interest twice a year.
Amortization Period
The total time period over which a loan or mortgage is scheduled to be paid off through regular payments.
- Acquire the ability to assess and calculate the influence of incremental or lump payments on the amortization schedule of a home loan.
- Comprehend the consequences of unique mortgage characteristics, including "cash-back" incentives and options for payment deferral.
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MR
Learning Objectives
- Acquire the ability to assess and calculate the influence of incremental or lump payments on the amortization schedule of a home loan.
- Comprehend the consequences of unique mortgage characteristics, including "cash-back" incentives and options for payment deferral.