Question

The price of a home is $120,000. The bank requires a 10% down payment and two points at the time of closing. The cost of the home is financed wit
a 30-year fixed-rate mortgage at 8.5%.
Find the amount of the mortgage.

Answer 1

Answer:

The amount of the loan is $120,000 -10% + 2% = $110,400, assuming the "points" are added to the financed amount.

I find that the monthly payment will be

$848.89. There will be 360 such payments over 30 years, for a total payment amount of $30The amount of the loan is $120,000 -10% + 2% = $110,400, assuming the "points" are added to the financed amount.

R = Pi/[1 - (1+i)^(-n)] where

P = 110,400

R = the monthly payment

i = 8.5/[100(12)] = .007083...

n = 30(12) = 360 yielding

R = $848.88 per month.

Therefore, the total interest paid is 360(848.88) - 100,400.

5,600. Subtract the original principle (110,400) from that to get the interest paid.

hopes this helps :]