Question

You have borrowed $160,000 to buy a house. The interest rate on the mortgage is 5.75% APR. You make a payment of $848 each month. What is the balance you still owe after two years?

Answer 1

We should use the formula for future value and subtract the amount paid.

The balance you still owe after two years is:

160,000×(1 + 0.0575)^2 - 848×24 = $158,577.