Question 1190593: A. Avery and their family currently pay $1300 in rent per month. They want to know how much they could borrow for a mortgage if they wanted to make monthly payments that are the same as their current rent.
1. One possible loan is a 30-year mortgage with a 3.48% APR. How much could Avery borrow? (Round down to the dollar.)
How much would they pay back over the life of the loan?
Found 2 solutions by CPhill, ikleyn:
Answer by CPhill(1987)   (Show Source):
You can put this solution on YOUR website! Here's how to calculate the loan amount and total payback:
**1. Loan Amount:**
We'll use the present value of an annuity formula, as the loan amount is the present value of the stream of future mortgage payments.
PV = PMT * [1 - (1 + r)^-n] / r
Where:
* PV = Present Value (Loan Amount - what we want to find)
* PMT = Monthly Payment ($1300)
* r = Monthly Interest Rate (3.48% annual / 12 months = 0.0348/12 = 0.0029)
* n = Number of Payments (30 years * 12 months = 360)
PV = 1300 * [1 - (1 + 0.0029)^-360] / 0.0029
PV = 1300 * [1 - 0.3733] / 0.0029
PV = 1300 * 0.6267 / 0.0029
PV = 1300 * 216.10
PV ≈ $280,930
Rounded down to the dollar, Avery could borrow approximately **$280,930**.
**2. Total Payback:**
Total Payback = Monthly Payment * Number of Payments
Total Payback = $1300 * 360
Total Payback = **$468,000**
Answer by ikleyn(52865)  (Show Source):
You can put this solution on YOUR website! .
Avery and their family currently pay $1300 in rent per month. They want to know how much they could borrow
for a mortgage if they wanted to make monthly payments that are the same as their current rent.
One possible loan is a 30-year mortgage with a 3.48% APR. How much could Avery borrow? (Round down to the dollar.)
How much would they pay back over the life of the loan?
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Calculations in the post by @CPhill are not accurate.
The formula, which should be used, is
PV =  .
Calculations should be done without making intermediate rounding.
Rounding is made at the end, ONLY.
The correct answer is 290,224.56 dollars, which can be rounded to $290,225.
Solved.
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I used MS Excel in my computer, which works with 15 decimals after the decimal point,
providing a necessary precision.
It is equivalent to Google worksheet.
These are the best and the most appropriate calculators for such computing.
You write the formula in any text editor, copy-paste it into the spreadsheet cell and get the answer instantly.
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