Marlin obtains a 20/6 balloon mortgage to finance $305,500 at 5.75%. How much principal and interest will he have already paid when his balloon payment is due?

$188,267.86

$152,285.77

$154,430.64

$249,256.48

$154,430.64

Step-by-step explanation:

The first step is for us to determine the monthly payment as follows:

Mortgage amount can be found as the present value of all monthly payments, hence, using the formula below we can determine monthly payment as follows:

mortgage amount=monthly payment*(1-(1+r)^-n/r

mortgage amount=$305,500

monthly payment is unknown

r=monthly interest rate=5.75%/12=0.4791667%

n=number of monthly payments in 20years=20*12=240

305,500=monthly payment*(1-(1+0.4791667% )^-240/0.4791667%

305,500=monthly payment*(1-0.31750756 )/0.0047916670

305,500=monthly payment*0.68249244 /0.0047916670

monthly payment=305,500*0.0047916670 /0.68249244

monthly payment=$2,144.87  

Number of months that payments have been made=6*12=72

total paid=$2,144.87*72

total paid for 6 years=$ 154,430.64  

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