The loan balance equals the present value of the monthly payment for the remaining term of the loan. Use columns 5 and 6 of the compound interest tables to solve this problem.
Mortgage Problem #2:
Jane has a $100,000 loan at 8% for 30 years. She has paid on it for 10 years. What is the current balance?
|1.||Payment = Mortgage Constant (column 6) x Original Loan Amount (See Problem #1)|
|2.||Payment = 0.00733765 x $100,000 = $733.76|
|3.||Balance = Present Value of the monthly payment (an annuity) for the remaining term of the loan|
|4.||Balance = 119.554292 x $733.76 = $87,724|