Question

You have decided it’s time to buy a house, and you have found the one you want. The price is $500,000, and you will pay 10% in cash and will take a mortgage on the balance. The annual interest rate is 8%, the length of the loan is 30 years, and you are making payments at the end of each month. What is the amount of your monthly payment, rounded to the nearest dollar

Answer 1

Based on the amount of the loan, the interest rate, and the loan period, the monthly payment would be $3,302.

Loan Amount

= Price of house - Amount in cash

= 500,000 - ( 500,000 x 10%)

= $450,000

Periodic interest

= 8% / 12 months

= 8/12%

Number of periods

= 30 x 12 months

= 360 months

Monthly Payment

This is an annuity as the payment is constant. The loan value will be the present value of the annuity.

Present value of annuity = Annuity x ( 1 - ( 1 + rate) ^ - number of periods) / rate

450,000 = Annuity x ( 1 - ( 1 + 8/12%) ⁻³⁶⁰) / 8/12%

Annuity = 450,000 / 136.283494

= $3,302

In conclusion, monthly payment would be $3,302.

Find out more on loan amounts at brainly.com/question/24576997.