Question 1169214: You want to buy a $233,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan for the rest.
a) How much is the loan amount going to be?
$
b) What will your monthly payments be if the interest rate is 6%?
$
c) What will your monthly payments be if the interest rate is 7%?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! you can use a formula, or you can use a calculator.
calculator is the easiest way to go, although the formula is not all that difficult, once you know what it is.
we'll go with the calculator.
the house costs 233,000.
you put a 20% down payment, so the mortgage will be for:
233,000 - .2*233,000 = 186,400
if the interest rate is 6% per year compounded monthly, then:
present value = 186,400
future value = 0
interest rate = 6% per year / 12 = .5% per month.
number of months = 30 years * 12 = 360 months.
solve for payments at the end of each month to get:
payments at the end of each month = 1,117.56
if the interest rate if 7% per year compounded monthly, then:
present value = 186,400
future value = 0
interest rate = 6% per year / 12 = .58333333....% per month.
number of months = 30 years * 12 = 360 months.
solve for payments at the end of each month to get:
payments at the end of each month = 1,240.12
answers to your questions are:
a) How much is the loan amount going to be?
$186,400
b) What will your monthly payments be if the interest rate is 6%?
$1,117.56
c) What will your monthly payments be if the interest rate is 7%?
$1,240.12
calculator used can be found at https://arachnoid.com/finance/index.html
here's a display of the inputs and outputs from that calculator.
in the calculator, .....
present value = pv
future value = fv
number of months = np
payment amount = pmt
rate percent per month = ir
payment at set to end.
also in the calculator, ......
if you enter the present value as positive, the payments will show up as negative.
it's a cash flow thing.
money coming in is positive.
money going out is negtive.
first display is at 6% per year compounded monthly.
second display is at 7% per year compounded monthly.
if you need to know what the formula is, let me know and i'll send it to you.
theo
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