Question

The monthly mortgage payment on your house is $821.69. it is a 30 year mortgage at 6.5% compounded monthly. how much did you borrow? (round to the nearest dollar)

Answer 1

The amortization formula can be used to figure this.

... A = P(r/n)/(1 -(1 +r/n)^(-nt))

where A is the monthly payment, P is the amount borrowed, r is the annual interest rate, n is the number of times per year interest is compounded, and t is the number of years.

Fill in the given information, and solve for P (in either order).

... 821.69 = P(.065/12)/(1 - (1 +.065/12)^(-12*30)) ≈ 0.00632068023P

... P ≈ 130,000.25 . . . . . divide by the coefficient of P

Rounded to the nearest dollar, you borrowed $130,000.