Question

Mr. and Mrs. Wong purchased their new house for $350,000. They made a down payment of 20%, and amortized the rest over 30 years. If the interest rate is 4.2%, which of the following is their correct monthly mortgage payment?

Answer 1

$1,369.25

Explanation:

Mr. and Mrs. Wong purchased their new house for $350,000.

They made a down payment of 20%

Down payment = 20% of 350000

= $70,000

Loan amount, P = $350,000 - $70,000

= $280,000

Rate of interest, r = 4.2% or 0.042

Time, t = 30 years

Number of period, n = 12 ( monthly )

Formula:
`E=(P\cdot (r)/(n))/(1-(1+(r)/(n))^(-n\cdot t))`

Substitute the values into formula

`E=(280000\cdot (0.042)/(12))/(1-(1+(0.042)/(12))^(-12\cdot 30))`

E = $1,369.25

Hence, The monthly payment for their mortgage will be $1,369.25