A home is purchased for 395,000 with a 10% down payment and a 30 year amortized...

A home is purchased for 395,000 with a 10% down payment and a 30 year amortized mortgage charging 3.6% compounded monthly find: a) the amount borrowed, b) the size of the monthly mortgage payment and c) the total interest paid over 30 years?

Expert Solution

a) the amount borrowed = purchase price of home*(1-down payment) = 395,000*(1-0.10) = 395,000*0.90 = 355,500‬

b) the size of the monthly mortgage payment is $1,616.26.

Amount borrowed	355,500
Loan period (in months)	360
monthly interest rate	0.30%
Future value	0
Monthly mortgage payment	($1,616.26)

monthly mortgage payment is a cash outflow. so formula shows it as a negative value.

Calculation

c) the total interest paid over 30 years is $226,355.12.

Amount borrowed	355,500
Loan period (in months)	360
monthly interest rate	0.30%
Future value	0
Starting month	1
Ending month	360
Total interest paid	($226,355.12)

Total interest paid is a cash outflow. so formula shows it as a negative value.

Calculation

jeff jeffy answered 2 years ago

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