<u>A home buyer puts 20% down on $250,000 house and uses a mortgage to borrow the rest. The amount of mortgage is $200,000.
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Further Explanation:
Mortgage payment:
Mortgage payment is the payment of the principal and interest on the mortgage loan. The mortgage loan is a type of loan where the asset is used as collateral, and the loan is disbursed. A mortgage payment remains constant. The issuer of the loan specifies the amount of the mortgage payment and the time interval of the payment. So, the amount of mortgage payment remains the same for all the installments.
If the down payment is higher, the amount of mortgage is lower. If the down payment is lower, the amount of mortgage is lower. The amount of down payment canA mortgage by multiplying the rate of the down payment with the cost of purchasing items.
Compute the amount of mortgage:
Amount of mortgage = Cost of home – Down payment
= $250,000 - $50,000
= $200,000
Working note 1:
Compute the down payment:
Down payment = Cost of home × Percentage of down payment
= $250,000 × 20%
= $50,000
Learn more:
1. Learn more about the collateral loans
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2. Learn more about loaning the money
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3. Learn more about the mortgage payment
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Answer details:
Grade: Senior School
Subject: Business Studies
Chapter: Bonds & Debentures
Keywords: mortgage, a home buyer, 20% down, the amount of mortgage, loan, due date, maturity date, principal, interest, interest rate, could change, never changes, increases annually, decreases annually, fixed-rate, mortgage, mortgage loan, mortgage loan payment, mortgage payment.
