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Robert took out an 80/20 mortgage to buy a $145,000 house. The first (80%) mortgage has an interest rate of 4.75%, and the second (20%) mortgage has an interest rate of 7.525%. Both mortgages are 30-year fixed-rate mortgages. What is the total mortgage payment for this house?

User Fostandy
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1 Answer

3 votes

Answer:

$808.38

Step-by-step explanation:

The formula for the payment amount (A) on principal P at interest rate r compounded monthly for a loan period of t years is ...

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

For the main loan, the payment is ...

... A = 0.80·145000·(.0475/12)/(1 -(1 +.0475/12)^(-12·30)) = 605.11

For the piggyback loan, the payment is ...

... A = 0.20·145000·(.07525/12)/(1 -(1 +.07525/12)^(-12·30)) = 203.27

So, the total of monthly payments for the two loans is ...

... $605.11 +203.27 = $808.38

User Denny Weinberg
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