You need a 30-year, fixed-rate mortgage to buy a new home for $335,000. Your mortgage bank will lend you the money at an APR of 6.3 percent for this 360-month loan. However, you can afford monthly payments of only $1,750, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at $1,750? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

Balloon payment is $344311.23

Explanation:

Given data

buy home = $335,000

APR r = 6.3 %

loan time n = 360 month

monthly payments = $1,750

to find out

how large Balloon payment

solution

we apply here formula that is

present value = principal (1 - (1 / (1 + r) ^n / r

so put all value

present value = 1750 (1 - (1 / (1 + 0.063/12) ^360 / 0.063/12

present value = 282726.48

so

of amount owe here is 335000 - 282726.48

amount owe = $52273.52

so that

balloon amount for 30 year

balloon amount = amount owe (1+r) ^n

balloon amount = 52273.52 (1+0.063/12) ^360

balloon amount is 344311.23

so Balloon payment is $344311.23