Question

Find the monthly house payment necessary to amortize the following loan. In order to purchase a home, a family borrows $110,000 at 2.9% for 30 yrs. What is their monthly payment? Round the answer to the nearest cent.

Answer 1

The monthly payment for purchasing the home will be $457.85.

What is a monthly payment?

The term loan refers to a sort of credit vehicle in which a sum of money is lent to another party in exchange for the value or principal amount being repaid in the future.

Then the formula of monthly payment (MP) will be

$\rm MP = P \times \dfrac{r(1+r)^n}{(1+r)^n - 1}$

In order to purchase a home, a family borrows $110,000 at 2.9% for 30 years.

We have

P = $110,000

r = 0.029 / 12 = 0.0024

n = 30 × 12 = 360

Then the monthly payment will be

$\rm MP = 110,000\times \dfrac{0.0024(1+0.0024)^{360}}{(1+0.0024)^{360} - 1}$

On further solving, we have

MP = 110000 × 0.0024 × 1.723

MP = $ 457.85

More about the monthly payment link is given below.

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