After Three Years of the First Five-Year Term at 6

question 60

Essay

After three years of the first five-year term at 6.3% compounded semi-annually, Dean and Cindy decide to take advantage of the privilege of increasing the payments on their $200,000 mortgage loan by 10%. The monthly payments were originally calculated for a 30-year amortization.
a) How much will the amortization period be shortened?
b) What will be the principal balance at the end of the five-year term?

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Definitions:

Expectancy Violation Theory

A theory that examines how individuals respond to unexpected behaviors of others and the significance of those behaviors.

Personal Zone

An individual's preferred physical space around them, influencing social interactions and personal comfort.

Intimate

Characterized by a close, personal, and private relationship or interaction between individuals.

Social

Relating to society or its organization, emphasizing the interaction and relationships of individuals within a community.