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7 October, 01:09

Abby and jason are building a new house. they obtained a construction loan of $100,000, which will be rolled over into a conventional 30-year mortgage when the house is completed in 16 months. simple interest of 2% per month will be charged on the construction loan. the 30-year mortgage will carry a 12% interest rate with monthly payments. (what is the monthly payment that abby and jason will make?) if they make each payment as scheduled for the life of the 30-year mortgage, how much total interest will they pay on the house (including the construction loan interest) ?

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  1. 7 October, 02:09
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    the initial principal balance is $100,000, but it will gain 2% simple monthly interest during 16 months = $100,000 + ($100,000 x 2% x 16) = $132,000

    the mortgage loan's principal = $132,000

    APR = 12%

    n = 30 years or 360 monthly payments

    1) using a loan calculator we can determine that the monthly mortgage payment (only principal + interest) = $1,357.77

    2) since they will make 360 monthly payments, they will pay in total = $1,357.77 x 360 = $488,796.71

    in total they will pay $$356,796.71 in interest
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