Question

Molly is buying a house for $202,000. she is financing $185,500 and obtained a 30 year fixed rate mortgage with a 5.125% interest rate. How much are her monthly payments?

A- $1010.02
B- $1099.86
C- $12,239.53
D- $13,328.22

Answer 1

The answer is letter A.

Molly's monthly payment for 30 years is $1,010.02.

Answer 2

The value of the Financing loan is $185,500 . The Rate per month is 5.125%.

We will use the formula
`PV = PMT *(( 1 - ( 1+r)^(-n)))/(r)`

Where PV is the Present Value of financing, which is $185,500

PMT=Payment every month, which is to be found.

r=interest rate=5.125%

n=number of months in 30 years=12\times 30=360

`\therefore 185,500 = PMT * (1-(1+(5.125)/(1200)))/((5.125)/(1200)) =PMT * 183.6591`

Therefore,
`PMT =(185,500)/(183.6591)=1010.02`

Therefore Molly's monthly payments are $1010.02.

Thus Option A is the correct option.