SOLUTION: You want to get a home loan for $240,000. The bank is offering a 3% interest rate for 15 years. What will your monthly payments be?

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Question 1206220: You want to get a home loan for $240,000. The bank is offering a 3% interest rate for 15 years. What will your monthly payments be?

Answer by ikleyn(52794) About Me  (Show Source):
You can put this solution on YOUR website!
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You want to get a home loan for $240,000. The bank is offering a 3% interest rate for 15 years.
What will your monthly payments be?
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Use the formula for the monthly payment for a loan

    M = P%2A%28r%2F%281-%281%2Br%29%5E%28-n%29%29%29


where P is the loan amount; r = 0.03%2F12 is the interest rate per month;
n is the number of payments (same as the number of months); M is the monthly payment.


In this problem  P = $240000;  r = 0.03%2F12,  n = 15*12 = 180 monthly payments.


Substitute these values into the formula and get for monthly payment

    M = 240000%2A%28%28%280.03%2F12%29%29%2F%281-%281%2B0.03%2F12%29%5E%28-180%29%29%29 = $1657.40.


ANSWER.  The monthly payment is $1657.40.


In total, you will pay  15*12*1657.40 = 298,332 dollars in 15 years.


The difference $298,332 - $240,000 = $58,332 is the interest you pay to financial company.

Solved.