Question

You want to buy a $255,000 home. You plan to pay 15% as a down payment, and take out a 30 year loan for the rest.

a) How much is the loan amount going to be? $

b) What will your monthly payments be if the interest rate is 5%? $

c) What will your monthly payments be if the interest rate is 6%? $

Answer 1

Answer a)

Loan Amount will be = 255000- Down Payment

= 255,000 - 15% * 255,000

= $ 216,750

Answer b )

EMI =

where is the rate of interest for a compounding period 5% / 12 = 0.41666666666%

n is the no of compounding periods i.e. 30 years *12 = 360 periods

EMI =

=  

= 4034.92157616 / 3.46774431294

= $ 1,163.56

Answer c)

EMI =

where is the rate of interest for a compounding period 6% / 12 = 0.5%

n is the no of compounding periods i.e. 30 years *12 = 360 periods

EMI =

=  

= 6526.96588628 / 5.02257521226

= $ 1,299.53

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