Question

Mr. and Mrs. Wong purchased their new house for $350,000. They made a down payment of 20%, and amortized the rest over 30 years. If the interest rate is 4.2%, which of the following is their correct monthly mortgage payment?

Answer 1

Answer:

$1,369.25

Step-by-step explanation:

Mr. and Mrs. Wong purchased their new house for $350,000.

They made a down payment of 20%

Down payment = 20% of 350000

                        = $70,000

Loan amount, P = $350,000 - $70,000

                         = $280,000

Rate of interest, r = 4.2% or 0.042

Time, t = 30 years

Number of period, n = 12 ( monthly )

Formula: $E=\dfrac{P\cdot \frac{r}{n}}{1-(1+\frac{r}{n})^{-n\cdot t}}$

Substitute the values into formula

$E=\dfrac{280000\cdot \frac{0.042}{12}}{1-(1+\frac{0.042}{12})^{-12\cdot 30}}$

E = $1,369.25

Hence, The monthly payment for their mortgage will be $1,369.25