SOLUTION: A couple wants to buy a house that costs $320,000. The house can be financed with a fixed rate mortgage of 15 years at 4.8% compounded monthly. They decide to make a 25% down pay

Question 993046: A couple wants to buy a house that costs $320,000. The house can be financed
with a fixed rate mortgage of 15 years at 4.8% compounded monthly. They
decide to make a 25% down payment, and 2.5 points must be paid to the bank
at closing.
a. What is the down payment?
b. What is the amount borrowed?
c. What is the price of the 2.5 points at closing?
d. What are the monthly payments?
e. How much interest is paid?
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
A couple wants to buy a house that costs $320,000. The house can be financed
with a fixed rate mortgage of 15 years at 4.8% compounded monthly. They
decide to make a 25% down payment, and 2.5 points must be paid to the bank
at closing.
a. What is the down payment?
down payment is .25 * 320,000 = 80,000
b. What is the amount borrowed?
amount borrowed is 320,000 - 80,000 = 240,000
c. What is the price of the 2.5 points at closing?
price is .025 * 240,000 = 6,000
each point is 1 percent of the price of the mortgage.
d. What are the monthly payments?
mortgage is for 15 years.
number of monthly payments is 15*12 = 180
interest rate is 4.8% compounded monthly.
interest rate per month is 4.8% / 12 = .4%
monthly payment will be 1,872.99
e. How much interest is paid?
total payments is equal to 1,872.99 * 12 * 15 = 337,138.2
principal is 240,000
total interest is 337,138.2 - 240,000 = 97,138.2
here's an online calculator that helps you calculate the mortgage.
http://www.arachnoid.com/lutusp/finance.html
here's my inputs that got you the monthly payment.
$$$

i entered what was shown and then clicked on pmt and the calculator gave me the result.
the calculator also shows you the formulas you can use if you have to do it manually.

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