You decide to buy a house for a total of $305,469. To get amortgage loan,...

You decide to buy a house for a total of $305,469. To get a mortgage loan, you make a 10% down payment, and the bank will lend you the rest. The interest rate quoted for this loan is 4% APR, and the loan will be paid (and interest compounded) every month, for the next 30 years. How much is the TOTAL monthly payment for this mortgage?

Enter your answer in dollars, rounded to the nearest cent (2 decimals).

Solutions

Expert Solution

Information provided:

Cost of the house = $305,469

Down payment = 10%*$305,469 = $30,546.90

Mortgage = Present value= $305,469 - $30,546.90 = $274,922.10

Time= 30 years*12 = 360 months

Interest rate= 4%/12= 0.3333% per month

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

PV= -274,922.10

N= 360

I/Y= 0.3333

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

The value obtained is 1,312.52.

Therefore, the amount of monthly payment is $1,312.52.

Therefore, the total monthly payment is = $1,312.52*360

= $472,507.26.

jeff jeffy answered 1 year ago

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