Question

PLEASE HELP ME!!!!!

Sonora has a 4.6% fixed rate 15-year mortgage in the amount of $375,000. The total cost of principal and interest is about $519,827. Which of the following is closest to Sonora's monthly payment?
$2,083
$3,466
$2,500
$2,888

Answer 1

We have to use mortgage formula to find monthly payment here.

The formula is

`M = P ( (r(1+r)^n)/(((1+r)^n -1)) )`

Where, M = monthly payment, P = principal amount, r = rate of interest, n = number of payments.

Here given, P = 375,000,

r = 4.6% annually =
`(4.6)/(12)`% monthly = 0.3833333% = 0.00383333.

As 15 years given and we know there are 12 months in a year.

So n =
`(15)(12) =180`

Now by plugging in all the values in the formula we will get,

`M = 375000(((0.00383333)(1+0.00383333)^(180))/(((1+0.00383333)^(180)-1)) )`

By calculating them we will get, M = $2888 ( Approximating to the nearest whole number)

So we have got the required answer.

Option 4 is correct here.

Answer 2

$519,827/15yr=$34,655/yr
$34,655/12mo=$2887.9/mo

The closest amount for Sonora's monthly payment is $2,888.