Question

You purchased a new house for $200,000 and financed the entire purchase with a $200,000 mortgage, payable monthly over 30 years at a yearly rate of 5.5%. How much are your monthly payments, assuming you made your first payment at the end of the first month?

Answer 1

Using PMT formula in excel, we can easily find out the valus of monthly payments to be paid:

Thus, the monthly payment comes out to be $1,135.58.

The same question can also be solved using the following formula:

where,

• Present value of annuity is $200,000
• r is 5.5%/12 {to be converted into monthly interest}
• n is 30*12 months
• We need to find p (which is the monthly payment to be made)

Putting all the values in the formula above, we'll get that the monthly payment comes out to be $1,135.58.