Question

Your family is expanding in number, and so you decide to sell your current home and upgrade to a larger home. You estimate that you can sell your current home for $100,000 and can buy a larger home for $475,000. You plan to use the entire $100,000 sale proceeds as a down payment on the new home and will finance the remainder for 15 years at 4% nominal annual interest compounded monthly. What is your estimated monthly mortgage payment

Answer 1

The Estimated Monthly Mortgage Payment

= $2,810.81

Step-by-step explanation:

Data and Calculations:

House price = $475,000

Down payment = $100,000

Percentage of down payment = 21.05% ($100,000/$475,000 * 100)

Finance period = 15 years = 180 months (15 * 12)

Nominal annual interest compounded monthly = 4%

The estimated monthly mortgage payment using an online finance calculator:

Monthly Pay: $2,810.81

House Price $475,000.00

Loan Amount $380,000.00

Down Payment $95,000.00

Total of 180 Mortgage Payments $505,946.54

Total Interest $125,946.54

Mortgage Payoff Date Jan. 2036