Question

Samantha wants to buy a house and plans to rent the apartment located in the basement for extra income. The house has a purchase price of $200,000 and she will make a 10% down payment. Samantha has qualified for a 30 year mortgage with a fixed rate of 5.875%. Approximately how much rent should she charge for the apartment in order to cover her monthly mortgage payment if she only wants to spend $500 a month of her own money?

Answer 1

Answer:

$567.07

Step-by-step explanation:

Given that :

Purchase price = $200,000

Number of years = 30

Rate = 5.875%

Down payment = 10%

Hence, mortgage amount :

Purchase price - down payment

200,000 - (0.1 * 200000)

200,000 - 20,000

= $180,000

Using a mortgage calculator :

Mortgage amount = 180,000

Mortgage term = 30 years

Interest = 5.875%

Monthly payment will be : $1067.07

Hence, if she only wants to $500 from her own money, A rent of ($1067.07 - $500) = $567.07 will need to be charged