Name ________________________________
Fixed Rate Mortgage Practice Problems
Use the following information to answer the questions. The loan amount is $125,000. The contract rate is 6.75% for 30 years with monthly payments. There are 2 points charged at origination.
1. What is the monthly payment?
$810.75
2. How much interest will be paid in the 12th year of the mortgage?
$6,935.63
3. What is the balance of the mortgage at the end of 5 years?
$117,344.64
4. What is the APR stated by the lending institution?
6.948%
5. What is the actual borrowing cost (APY) if the mortgage is prepaid at the end of the 10th year?
7.046%