Asked by Connor Romero on Jun 10, 2024
Verified
A $100,000 mortgage at 7.1% compounded semi-annually with a 20-year amortization requires monthly payments. How much will the amortization period be shortened if a $10,000 lump payment is made along with the 12th payment and payments are increased by 10% starting in the third year?
Compounded Semi-annually
Involves the calculation and addition of interest to the principal sum twice per year.
Lump Payment
A single, one-time payment made for a significant amount instead of breaking the payment into installments.
- Understand and calculate the impact of making additional payments or lump sum payments on the amortization period of a mortgage.
Verified Answer
SB
Learning Objectives
- Understand and calculate the impact of making additional payments or lump sum payments on the amortization period of a mortgage.