Kate is applying to the Bank of Montreal for a mortgage of $423,500. The bank is...

Kate is applying to the Bank of Montreal for a mortgage of $423,500. The bank is quoting 2.99% semi annually. She would like to have a 25-yar amortization period and wants to make payments monthly. However, she must pay 20% down payment to avoid additional bank insurance. What will Kate’s monthly payment be?

Expert Solution

APR(monthly) = 12[(1 + 0.0299/2)¹/⁶ - 1] = 2.97%

Loan Amount = 0.80(423,500) = $338,800

Calculating Monthly Payment,

Using TVM Calculation,

PMT = [FV = 0, PV = 338,800, N = 300, I = 0.0297/12]

PMT = $1,601.35

jeff jeffy answered 2 years ago

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