Question

Amortize a 30-year mortgage for a $200,000 house cost with a 20% down payment. The mortgage interest rate is 4.125%. How much is the monthly payment? How much will the borrower pay in total interest?

Answer 1

Information provided:

Cost of the house= $200,000

Down payment= 0.20*$200,000= $40,000

Mortgage= $200,000 - $40,000= $160,000

Time= 30 years*12= 360 months

Interest rate= 4.125%/12= 0.3438% per month

The monthly payment is calculated by entering the below in a financial calculator:

PV= -160,000

N= 360

I/Y= 0.3438

Press the CPT and PMT to compute the monthly payment.

The value obtained is 775.44.

Therefore, the monthly payment is $775.44.

Total interest payment= Total monthly payments - Mortgage

                                   = $279,158.40 - $160,000

                                   = $119,158.40.

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