Question

I have bought a house for $300,000. I made a 20% down payment and borrowed the rest at 4.2% APR with monthly compounding. It is a 30-year amortized loan. What will be my payments each month at t=1,2,…,360?

*Please post any calculator use and formulas*

Answer 1

Information provided:

Cost of the house= $300,000

Down payment= 20%*$300,000= $60,000

Mortgage= Present value= $300,000 - $60,000 = $240,000

Time= 30 years*12= 360 months

Interest rate= 4.2%/12 = 0.35% per month

The monthly payment is calculated by entering the below in a financial calculator:

PV= -240,000

N= 360

I/Y= 0.35

Press the CPT key and PMT to compute the amount of monthly payment.

The value obtained is 1,173.64.

Therefore, the amount of monthly payment is $1,173.64.