Question

You decide to buy a house for a total of $214452. To get a mortgage loan, you make a 10% down payment, and the bank will lend you the rest. The interest rate quoted for this loan is 5% APR, and the loan will be paid (and interest compounded) every month, for the next 30 years. How much is the TOTAL monthly payment for this mortgage?

Answer 1

Step-1:Calculate Amount borrowed

Cost of house

$ 2,14,452

Less:Down Paymwnt

$ 2,14,452

x

10%

=

$     21,445

Borrowed Amount

$ 1,93,007

Step-2:Calculate monthly amount

Monthly Amount

=

Loan Amount/Cumulative discount factor

=

$ 1,93,007

/

186.1968

=

$       1,037

Working:

Cumulative discount Factor

=

(1-(1+i)^-n)/i

Where,

=

(1-(1+0.00417)^-360)/0.00417

i

=

5%/12

=

0.00417

=

186.1968

n

=

30*12

=

360

Step-3:Calculate total amount of monthly amount

Total monthly payment

=

$       1,037

x

360

=

$ 3,73,167

Thus, Total monthly payment is

$ 3,73,167