Discussion math

1.

Using the internet research, my house listing is:

http://realestate.nytimes.com/sales/detail/2958-3555944/795-Fifth-Avenue-Apt-30-31-NEW-YORK-NY-10065

Current Prime Rate = 4.16%

Attached below is the screenshot.

Monthly Payment = P = ( r * A ) / ( 1 - (1+r)-N)

Where A is the loan amount i = periodic interest rate and ‘n’ is the number of periods.

A = $70000000

r = (3+4.16)/12% = 7.16%/12 = 0.5967%

n = 30

Substituting these values in the formula above,

Monthly payments = $473,257.76

P = (0.5967/100)*(70000000)/(1-(1+(0.5967/100))-(30*12))

If we borrow for 15 years,

Monthly payments = $635,458.00

P = (0.5967/100)*(70000000)/(1-(1+(0.5967/100))-(15*12))

2.

Cost of the home = $ 70,000,000.00

Monthly payments for 30 year period = $473,257.76

So, Total amount paid = 360(months)* $473,257.76(Monthly payments) = $170,372,793.6

So, interest paid to the bank = $170,372,793.6 - $70,000,000 = $10,0372,793.6

3.

 Balloon Mortgage:

This is a type of short term mortgage which requires the borrowers to make regular payments for a specific interval and then pay off the remaining balance within a relatively short time.

Time = 5 years.

Monthly payments = $ 100.00

Total payments for 59 months = 59*$ 100 = $ 5900

Since the interest is 0%,

We need to pay only the principal amount

So,

The 60th month payment = $70,000,000 - $5900 = $ 69,994,100.00

It can be difficult for the borrower to pay the balloon amount at the end of the period.