Question

Jeff decided to purchase a house, his mortage is a 30-year loan at 4.1 % compounded monthly. The final purchase price was $150,000.00 Jeff put down 2808.00 at closing. Find Jeffs monthly payment

Answer 1

$711.23

Explanation:

We assume the entire closing cost went to reducing the principal of the loan. Then the amount borrowed was $147,192.

Monthly payment

The amortization formula tells you the monthly payment.

A = P(r/12)/(1 -(1 +r/12)^(-12t))

P is the principal, r is the annual rate, and t is the number of years.

The monthly payment is ...

A = $147,192(0.041/12)/(1 -(1 +0.041/12)^-360) ≈ $711.23

Jeff's monthly payment is $711.23.