Question

You take out a 30-year mortgage to buy a house worth $312,000. The down payment is 21% and the annual interest rate is 4.4%. What are the monthly payments? Round to the nearest cent.

Answer 1

Cost of House = $312,000

Down Payment = 21% * Cost of House
Down Payment = 21% * $312,000
Down Payment = $65,520

Amount Borrowed = Cost of House - Down Payment
Amount Borrowed = $312,000 - $65,520
Amount Borrowed = $246,480

Annual Interest Rate = 4.40%
Monthly Interest Rate = 4.40% / 12
Monthly Interest Rate = 0.36667%

Time Period = 30 years or 360 months

Let monthly payment be $x

$246,480 = $x/1.0036667 + $x/1.0036667^2 + … + $x/1.0036667^359 + $x/1.0036667^360
$246,480 = $x * (1 - (1/1.0036667)^360) / 0.0036667
$246,480 = $x * 199.695156
$x = $1,234.28

Therefore, monthly payment is $1,234.28