Question 1190577: You can afford a $1300 per month mortgage payment. You've found a 30-year loan at 7% interest.
a) How big of a loan can you afford? (Round down to the cent.)
B) I got $468,000 of what I will pay the loan company
c) How much of that money is interest?
I've been doing this problem but I'm just stuck on the first question and the last one.
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! mortgage payment is 1300 per month for 30 years at 7% interest.
if the interest is compounded monthly and the payment is at the end of each month, then you would be able to afford a loan for 195,399.84.
the interest would be that 468,000 minus that = 272,600.16.
if the interest is compounded monthly and the payment is at the beginning of each month, then you would be able to afford a loan for 196,539.67.
the interest would be 468,000 minus that = 271,460.33.
most of the time that i've seen these problems, the payment is at the end of the month and the interest rate is compounded monthly, so give the first option a try and, if not good, then give the second option a try.
let me know if you have any questions or need further clarification.
theo
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