In: Finance
You are thinking of purchasing a house. The house costs $200,000. You have $29,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. What will be your annual payment if you sign this mortgage?
Annual payment | [P×r×(1+r)^n]÷[(1+r)^n-1] | ||
Here, | |||
1 | Interest rate per annum | 7.00% | |
2 | Number of years | 30 | |
3 | Number of compoundings per per annum | 1 | |
1÷3 | Interest rate per period ( r) | 7.00% | |
2×3 | Number of periods (n) | 30 | |
Loan amount (P) | $ 171,000 | =200000-29000 | |
Annual payment | $ 13,780.28 | ||
(171000×7%×(1+7%)^30)÷((1+7%)^30-1) |