Question

You plan to purchase a $300,000 house using a 15-year mortgage obtained from your bank. The mortgage rate offered to you is 4.70 percent. You will make a down payment of 25 percent of the purchase price.

a. Calculate your monthly payments on this mortgage.
b. Construct the amortization schedule for the mortgage. How much total interest is paid on this mortgage?

Answer 1

Downpayment = 25% * 300,000 = 75,000

PV = 300,000 - 75,000 = 225,000

N = 15 * 12 = 180

FV = 0

I = 4.7%/ 12 = 0.39167%

Using Financial Calculator:

PMT = 1,744.32

Part B:

Total payment = 1,744.32 * 180 = 313,978.00

Total interest = 313,978.00 - 225,000 = 88,978