Question

Vanessa bought a house for $268,500. She has a 30 year mortgage with a fixed rate of 6.25%. Vanessa’s monthly payments are $1,595.85. How much was Vanessa’s down payment? a. $9,314.45 b. $16,781.25 c. $40,275.00 d. $53,040.00

Answer 1

Answer:

Option a - $9,314.45

Step-by-step explanation:

Cost of the house = $268,500

Time of repayment = 30 years

Repayment is done monthly, so number of repayments = 30 X 12 = 360

Monthly Payment = $1595.85

Rate of interest per payment period = $\frac{.0625}{12}$

So, Present value of monthly payments = 1595.85 X  $\frac{(1+\frac{.0625}{12})^{360}-1}{(1+\frac{.0625}{12})^{360}*(\frac{.0625}{12})}$

= $259,185.55

So, Vanessa's down payment = $268,500 - $259,185.55 = $9,314.45

Hope it helps.

Thank you !!