Question

PLS HELP :-)

Wayne is buying a house for $205,000. He is financing $175,000 and obtained a 30-year, fixed-rate mortgage with a 6.425% interest rate. How much are his monthly payments?

$1,285.64

$936.48

$1,097.50

$1,517.23

Answer 1

Option b is the answer to your question

Answer 2

Option C - $1,097.50

Explanation:

Given : $175,000 financing and obtained a 30-year, fixed-rate mortgage with a 6.425% interest rate.

To find : The monthly payments

Solution : To find monthly payments the formula is

Monthly payment = Amount / Discount factor

Discount factor
`D=(1-(1+i)^(-n))/(i)`

Where, Amount(A)=$175,000 , Rate(r)= 6.425%=0.06425, Time = 30 year

`i=(0.06425)/(12)=0.00535416666667`

Time(in months) n=30 × 12= 360

Put value in D we get,

`D=(1-(1+i)^(-n))/(i)`

`D=(1-(1+0.00535416666667)^(-360))/(0.00535416666667)`

`D=(1-(1.00535416666667)^(-360))/(0.00535416666667)`

`D=(1-0.146261631144)/(0.00535416666667)`

`D=(0.853738368856)/(0.00535416666667)`

`D=159.453080564`

Monthly payment
`M=(A)/(D)`

`M=(175,000)/(159.453080564)`

`M=1097.50153074`

Approx. monthly payment = $1097.50

Therefore, Option C is correct - $1097.50