Question

The Jones family is buying a new house at the price of $165,000. They will finance it with a twenty-year mortgage that has an interest rate of 8%.

(a)Assuming that the family can make a $39,000 down payment, what will their monthly mortgage payment be?

(b)If the family could increase the down payment by $10,000,then how much would their monthly mortgage payment be?

(c)In total, how much money can the family save by making the larger down payment

Answer 1

equation to find monthly payment of a loan is

here P is amount borrowed from loan . r is rate of interest in decimal per month. if Apr is given , then r=Apr/1200.

n is total number of payment . if number of years is t , then n=12t

here number of years is 20 . so n=12*20= 240

apr is 8 . so r= 8/1200

a) down payment is 39000. so P=165000-39000= 126000. apply this values to equation and find monthly payment

so monthly payment is 1053.91

b) when down payment increase by 10000, then downpayment= 49000

then P= 165000-49000= 116000

apply this value and find it

so monthly payment= 970.27

c)total amount paid= down payment+ monthly payment * n

so total payment in 39000 down Payment= 39000+1053.91*240=291938.4

total payment in 49000 down payment = 49000+ 970.27*240= 281864.8

so amount saved= 291938.4- 281864.8= 10073.6

so family can save 10073.6