Answer:
a. The Amount of the required down payment is $37,000
b. The amount of the mortgage is $148,000
c. The monthly payment for principal and interest is $953.62 per month
Step-by-step explanation:
a) In order to calculate the Amount of the required down payment we would have to use the following formula:
Amount of down payment = Value of home x Required down payment percentage
= $185,000 x 20%
= $37,000
b) In order to calculate the Amount of the mortgage we would have to use the following formula:
Amount of the mortgage = Value of home – Down payment
= $185,000 - $37,000
= $148,000
c) Loan Amount (P) = $148,000
Monthly Interest Rate (n) = 0.5% per month [6.00% / 12 Months]
Number of months (n) = 300 Months [25 Years x 12 Months]
Therefore, the Monthly Loan Payment = [P x {r (1 + r)n} ] / [(1 + r)n – 1]
= [$148,000 x {0.005 x (1 + 0.005)∧300}] / [(1 + 0.005)∧300 – 1]
= [$148,000 x {0.005 x 4.464}] / [4.464 – 1]
= [$148,000 x 0.02232] / 3.464
= $3,303.36 / 3.464
= $953.62 per month
The monthly payment for principal and interest is $953.62 per month
