Question

If the purchase price for a house is $218,500, what is the monthly payment if you put 3.5% down for a 30 year loan with a fixed rate of 6.5%? a. $1,332.73 b. $1,378.19 c. $1,247.54 d. $646.40

Answer 1

218,500 - (3.5% down payment) =
210,852.50
30 years = 360 months
rate 6.5%
Use the loan payment formula (REALLY complex - see attached).
rate = 6.5/1,200 = 0.005416667

monthly payment = (rate + [rate / (((1 + rate)^months) -1)] * principal
monthly payment = (0.005416667 + [0.005416667 / (((1.005416667)^360)-1)] * principal
monthly payment = (0.005416667 + [0.005416667 / (((1.005416667)^360)-1)] * principal
monthly payment = 0.005416667 + [(0.005416667 / 6.9917988084 -1)] *  210,852.50
monthly payment = 0.005416667 + [(0.005416667 / 5.9917988084)] *  210,852.50
monthly payment = 0.005416667 + [(0.005416667 / 5.9917988084)] *  210,852.50
monthly payment = (0.005416667 + 0.0009040135) * 210,852.50
monthly payment = 0.0063206805 * 210,852.50
monthly payment = 1,332.73

Answer is a.

Calculator to check your answers:
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Answer 2

The answer is going to be A