When Jane and Patrick Baker were “house hunting” five years ago, the fixed rate on a 30- year mortgage was 6% APR (Nominal Interest Rate) with monthly compounding. After walking through many homes, they finally reached a consensus and decided to buy a $500,000 home. The couple decided to put 20% down payment and took the 30-year mortgage with monthly payments.   What is Jane and Patrick’s monthly mortgage payment? Construct an amortization schedule in excel for the loan. During the first 5 years, how much has the couple paid towards the mortgage? What proportion of this was applied toward interest? What is the balance on their loan today

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.