Question

In: Finance

You are looking to purchase a new home. You are talking to a lender about a...

You are looking to purchase a new home. You are talking to a lender about a 5.000% interest rate loan for 30 years that amortizes monthly.

For 30 years and 5% the constant annual rate is 6.442%

What is your mortgage constant?

How to enter your answer? Let's say your calculated answer is 0.02759. That is the same thing as 2.759% so you should enter 2.759 as your final answer. Decimals matter for mortgage constants, interest rates, and cap rates, so don't round this example to 2.8. You need to keep at east two decimal places.

Solutions

Expert Solution

We see that the mortgage constant is given as=(5%/12)/(1-1/(1+5%/12)^(12*30))
=0.5368%
=0.5368

jeff jeffy answered 2 years ago
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