Question

You have decided to purchase a house that has a price of $150,000. You plan on putting 10% down and then financing the rest. Assuming you are able to get a 3% annual interest rate compounded monthly, what is your monthly payment?

Answer 1

ANSWER: ## THE ASSUMPTION THAT I HAVE MADE IS THAT THE TIME PERIOD IS 1 YEAR OR 12 MONTHS AS TIME IS NOT GIVEN IN THE QUESTION AND SO IF THE TIME PERIOD IS DIFFERENT SAY 5 YEARS (60 MONTHS) OR 10 YEARS (120 MONTHS) THEN THE ANSWER WILL CHANGE AS WE WILL HAVE TO CONVERT THE NO OF YEARS INTO MONTHS AND HAVE TO LOOK INTO THE TABLE FOR THAT SPECIFIC PERIOD. ##

Purchase price of house = $150,000

money taken on loan = purchase price of house - 10% of purchase price of house

money taken on loan = $150,000 - 10% * 150,000 = $150,000 - $15,000 = $135,000

i = 3% per annum or 3%/12 per month or 0.25%

n = 1 year or 12 months

In order to find the monthly payment we will use the following formula.

monthly payment = money taken on loan(a/p,i,n)

monthly payment = 135,000(a/p,0.25%,12)

mp = 135,000 * 0.0847 = $11,434.5

so the monthly payment will be $11,434.5 per month if the time period is 1 year or 12 months.