You just bought a home for $250,000 and are to make monthly payments of $1,834.41 for 30 years at 8% APR
Suppose you add $298.44 each month to the $1,834.41 house payment making your monthly payment $2,132.85. This extra amount is applied to the principal. How long will it take you to pay off your loan of $250,000? Use a calculator to determine your answer.
A) It will take under 15 years.
B) It will take about 16 years.
C) It will take slightly over 19 years.
D) It will take slightly over 20 years.
Answer: C
Explanation: C) With Mode of P/Y = 12 and C/Y = 12, I/Y = 8, PV = $250,000, PMT = -$2,132.85, and FV = 0, we get n = 228.85 months or 19.07 years.
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