By the end of year 8, would Demarco and Tanya have to pay a final payout of?
A. $120,887
B. $130,900
C. $143,152
D. $154,768
Answer (2)
The problem provides a table with mortgage details, including the balloon payment.
The balloon payment represents the final payout at the end of the mortgage term.
The table indicates the balloon payment is $143 , 152.99 .
Therefore, the final payout at the end of year 8 is $143 , 152.99 .
Explanation
Understanding the Problem We are given a table that describes a balloon payment mortgage. The table includes the mortgage amount, term, interest rate, monthly payment, and balloon payment. We are asked to determine the final payout at the end of year 8.
Identifying the Balloon Payment The table explicitly states that the balloon payment is $143 , 152.99 . This is the final payout that Demarco and Tanya would have to pay at the end of year 8.
Final Payout Therefore, the final payout at the end of year 8 is $143 , 152.99 .
Examples
Balloon payment mortgages are often used when borrowers expect their income to increase significantly in the future, allowing them to pay off the large balloon payment. For example, a recent graduate might take out a balloon payment mortgage, anticipating a higher salary after gaining experience. This type of mortgage can also be used for short-term financing needs, such as when a property is expected to be sold or refinanced before the balloon payment is due. Understanding balloon payments is crucial for financial planning and making informed decisions about mortgage options.
Demarco and Tanya need to pay a final payout of $143,152 at the end of year 8. This amount is identified as the balloon payment in their mortgage agreement. Therefore, the correct choice is option C: $143,152.
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