Question

Suppose you are buying your first condo for $145,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month. What will your monthly payments be?

$741.57


$780.60


$821.69


$862.77


$905.91

Answer 1

The monthly payment amount would be $821.69

Step-by-step explanation:

Hi, since you have already paid $15,000 (down payment), the amount of money to be financed is $130,000 ($145,000 - $15,000). Knowing that, we need to solve the following equation for "A".

`PresentValue=(A((1+r)^(n)-1) )/(r(1+r)^(n) )`

Where:

Present Value = money borrowed (in our case, $130,000)

r = effective interest rate (in our case, 6.5%/12= 0.5417% or 0.005417)

n = number of periodic payments (in our case, 30*12=360 monthly payments)

Everything should look like this.

`130,000=(A((1+0.005417)^(360)-1) )/(0.005417(1+0.005417)^(360) )`

`130,000=A(158.2108195)`

Therefore:

`A=821.69`

So, the monthly payments would be equal to $821.69.

Best of luck.