We are given:
Initial Price of the home = $150,000
Time period of the mortgage = 30 years OR 360 months
Interest rate = 5%
Monthly Mortgage payment:
Actual cost of the home (adding the interest):
The price of the home is $150,000 and the interest rate taken by the bank is 5% of the actual cost
Actual cost Jordan has to pay = $150,000 + (5% * 150,000)
Actual cost = 150000(1 + 5/100) [taking 150000 as a common factor]
Actual cost = 150000(105/100)
Actual cost = 1500*105
Actual cost = $157,500
Monthly payment Jordan has to make:
Jordan has to pay 157500 in 360 months
Monthly payment = 157500/360
Monthly Payment = $437.5
Hence, Jordan has to pay $437.5 per month for 30 years to pay the loan back