Question

Joe Levi bought a home in Arlington, Texas, for $147,000. He put down 25% and obtained a mortgage for 30 years at 6.00%. what is Joe's monthly payment? What is Joe's total interest cost?

Answer 1

Answer:

Joe's monthly payment is $661 and his total interest cost is $127710.

Step-by-step explanation:

Joe Levi bought a home for $147,000 and put down 25% and obtained a mortgage for 30 years at 6.00%

So, the amount of down payment $=(\ 147000\times 0.25)=\ 36750$]

and the amount of mortgage will be:  $(\ 147000-\ 36750)=\ 110250$

Formula for monthly payment:   $M= P[\frac{r}{1-(1+r)^-^n}]$ , where $M=$ Monthly payment,  $P=$ Principal loan amount, $r=$ rate of interest per month and $n=$ total number of months.

Here,  $P= \ 110250$,  $r= \frac{6}{12}\%=0.5\%= 0.005$ and  $n= (30\times 12)= 360$ months.

Plugging these values into the above formula, we will get.........

$M= 110250[\frac{0.005}{1-(1+0.005)^-^3^6^0}] \\ \\ M=110250[0.0059955...]\\ \\M=661.00445.... \approx 661$

So, Joe's monthly payment is approximately $661.

• Total amount paid in 30 years $=(\ 661\times 360)= \ 237960$

So, Joe's total interest cost will be:  $(\ 237960-\ 110250)=\ 127710$