# How much of the last payment goes to interest? How much of that last payment goes to completing the payments on the home?

Module 3 Credit Card and Mortgage Worksheet

Credit Cards

You have a credit card with a current balance of \$150. The interest rate is 13.99% and you use this card to pay your cell phone bill of \$89 each month. That is now the only time you use this card.

Reminders:

Finance charge is found by dividing the interest rate by 12 and then multiplying by the carry-over balance. This formula is entered for you!

Excel is a calculator, and you can perform any mathematical calculation by first starting with an equal sign (=).

You can autofill columns by dragging on the little green square in the bottom right corner of a cell.

Use Excel to answer the following questions:

If your minimum payment is 15% of your new balance, what is the balance of your card month 13 (line 14 in Excel)?

If your minimum payment is \$75, what is the balance of your card month 13 (line 14 in Excel)?

If your minimum payment is 50% of your new balance, what is the balance of your card month 13 (line 14 in Excel)?

Use guess and check: What DOLLAR amount would allow you to pay off the total balance in month 13 (line 14 of Excel)? (Your last payment, in line 12, may be less than the payment of all other months.)
What do you think is a better idea:

Paying a percentage of your monthly balance
or

Paying a fixed amount each month Why?

Mortgages

You decide to buy a house! The home is priced at \$279,000 and the bank has agreed to finance your home at 5.1% for 30 years.

(Note: Excel approximations do not include property taxes or insurance.)

Use the Excel document to answer the following questions:

What is the monthly payment?

How much of the first payment is interest? How much of that first payment actually goes to reducing the principal?

Use the autofill feature to drag this out for the 30 years (or 360 months).

How much of the last payment goes to interest? How much of that last payment goes to completing the payments on the home?

At which month did you pay approximately half of the mortgage? Is this halfway through your mortgage?

Change the payment value to be \$100 more than it is now (just type in the value).

If you pay just \$100 more each month, when will you make your last payment?

How much time does that cut off of your mortgage (how many months do you not have to make a mortgage payment)?

If you paid \$100 more for ____ months, you paid an extra ______ over that time period.

If you had paid your normal \$1,514.83 for the _____ months you cut off the mortgage, you would have paid _______ because of principal and interest.

Therefore, by paying an additional \$100 per month, you will save ________ over the life of the mortgage.

How much of the last payment goes to interest? How much of that last payment goes to completing the payments on the home?