Question

Will is buying a house for $185,000. He is financing $165,000 and obtained a 30-year, fixed-rate mortgage with a 6.725% interest rate. How much are his monthly payments? (2 points)

Answer 1

Answer: $1067.45

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Work Shown:

L = 165000 = loan amount or amount financed

r = 0.06725 = annual interest rate in decimal form

i = r/12 = 0.06725/12 = 0.005604167

i = 0.005604167 = approximate monthly interest rate in decimal form

n = number of months = 30*12 = 360 months

P = unknown monthly payment

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Apply the monthly payment formula

P = (L*i)/( 1-(1+i)^(-n) )

P = (165000*0.005604167)/(1-(1+0.005604167)^(-360))

P = 1067.44636311118

P = 1067.45