Question

Kate and Ashton have been approved for a $150,000 30-year mortgage with an APR of 5.5%. How much is their monthly payment?

Answer 1

Their payment can be computed using the formula for amortization.

... A = P(r/12)/(1 -(1 +r/12)^(-12t)) . . . . where ...

... ... P is the principal amount of the loan, r is the annual rate, t is the number of years, A is the monthly payment.

Filling in your values, this becomes ...

... A = 150,000·(0.055/12)/(1 -(1 +.055/12)^(-360))

... A ≈ 851.68

Their monthly payment is $851.68.