Question

The Smiths were just approved for a 25 year mortgage at an 11% fixed rate. If they had not filed bankruptcy in the past, they could have gotten a rate of 7%. If their loan amount is $128,000, how much more per month will the Smiths be paying for their mortgage as a result of their bankruptcy?

Answers:

a.$349.86

b.$125,840.78

c.$904.68

d.$235.09

Answer 1

a.$34 If their loan amount is $128,000, how much more per month will the Smiths be paying for their mortgage as a result of their bankruptcy?9.86

Answer 2

The extra amount that Smith would be paying for their mortgage as a result of bankruptcy is; A: $349.86

What is the Monthly Loan Payment?

Monthly Loan Payments (Bankruptcy);

Loan amount = $128,000

Period; n = 25 years

Interest rate = 11% (Bankruptcy)

Formula for monthly payment is;

Monthly Payment = A * r * [(1 + rⁿ)/[(1 + r)ⁿ + 1]

Where;

A is the loan amount.

r = Periodic interest rate = 11%/12 = 0.00916  

n = period = 25years * 12 = 300 months.

Plugging in the values, we have;

Monthly Payment = 128000 * 0.00916 * [(1 + 0.00916³⁰⁰)/[(1 + 0.00916)³⁰⁰ + 1]

Monthly Payment as a result of bankruptcy = $1254.54

If we use the same formula , we can also find the monthly payment in the absence of bankruptcy using 7% interest rate which will give us;

Monthly Payments in absence of bankruptcy = $904.68

Thus;

Extra amount per month that Smith is paying as a result of Bankruptcy = $1254.54 - $904.68 = $349.86

Read more about Monthly loan payments at; https://brainly.com/question/20737528