Question

Toni is considering a 3/27 balloon mortgage with an interest rate of 5.1% to

purchase a house for $121,000. What will be her balloon payment at the end

of 3 years?

O

A. $109,715.78

O

B. $108,908.33

O

C. $108,983.14

O

D. $115,460.91

Answer 1

Answer:the answer is D

Step-by-step explanation:

$115,460.91

Answer 2

Her balloon payment at the end of 3 years is  $115,460.91. The correct option is D.

What is balloon mortgage?

A balloon mortgage is one of the loan with low initial payments but the borrower is needed to repay the balance in a lump sump amount.

Given is the 3/27 balloon mortgage with an interest rate of 5.1% to purchase a house for $121,000.

The rate is fixed for a period of 3 years and later converts to a new fixed rate for the left 27 years.

using the formula for balloon payment.

FV = P*(1+r)n–P*[(1+r)n–1/r]

Substitute P = $121000, r = 5.1 and n=3 years, we get the balloon  payment is

FV = $115,460.91

Thus, her balloon payment at the end of 3 years is  $115,460.91. The correct option is D.

Learn more about balloon mortgage.

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