Question

Velida took out a 5/1 variable-rate mortgage for $150,000. The interest rate

Answer 1

Answer:

Velidas monthly mortgage payment  will be $828.31

Step-by-step explanation:

From the information given:

The cost of mortgage = $150,000

Monthly interest rate = 5.25%/12= 0.0525/12 = 0.004375

Amortization period = (30 × 12) months = 360 months

The monthly mortgage payment can be determined by using the formula:

$E = \dfrac{C \times r}{1 - ( 1+ r)^{-n}}$

$E = \dfrac{150000 \times 0.004375}{1 - ( 1+ 0.004375)^{-360}}$

$E = \dfrac{656.25}{1 - ( 1.004375)^{-360}}$

$E = \dfrac{656.25}{1 -0.20772}$

$E = \dfrac{656.25}{0.79228}$

E = $828.31