Question

Tremaine: wants a one bedroom townhouse in a trendy new development downtown; average cost is $145,000 is preapproved for a 4.38% interest rate on a 30-year fixed mortgage has saved $15,000 for a down payment

Answer 1

Using the monthly payment formula, it is found that the amount he will have to pay each month is of $649.45.

What is the monthly payment formula?

It is given by:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

In which:

• P is the initial amount.

• r is the interest rate.

• n is the number of payments.

In this problem, considering that the down payment does not count for interest, the parameters are given as follows:

P = 130000, r = 0.0438, n = 30 x 12 = 360.

Then:

r/12 = 0.0438/12 = 0.00365 -> 1+r = 1.00365.

Then the monthly payment is given by:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

$A = 130000\frac{0.00365(1.00365)^{365}}{(1.00365)^{365} - 1}$

A = 649.45.

More can be learned about the monthly payment formula at brainly.com/question/2151013

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