Question

You plan to purchase a $220,000 house using a 15-year mortgage obtained from your bank. The mortgage rate offered to you is 4.75 percent. You will make a down payment of 20 percent of the purchase price.

Monthly payments ______ ( Round your answer to 2 decimal places)

Total interest is paid on this mortgage _________ ( Round your answer to 2 decimal places )

Answer 1

Purchase Price of House = $220,000

Loan amount = Purchase Price of House*(1- % of downpayment)

Loan amount = $220,000*(1-0.20)

= $176.000

Calculating the Monthly Payment of loan:-

Where, P = Loan amount = $176,000

r = Periodic Interest rate = 4.75%/12 = 0.3958333%

n= no of periods = 15 years*12 = 180

Monthly payment of Loan = $1368.98

b). Total Interest Paid = (Monthly payment*No of payments) - Loan amount

=($1368.98*180) - $176000

Total Interest Paid = $70,416.40