Question

Albert Tilman wishes to buy a house selling for $100,000. His credit union requires him to make a 15% down payment. The currentmortgage rate is 10.5%. Find the total monthly payment for a 30-year loan.

Answer 1

Required down payment = $15 000

The monthly mortgage payment = $777.53

Step-by-step explanation

According to the data given:

Cost of house = $100 000

Interest rate = 10.5%

Time = 30 - years

Down payment = 15% of cost of the house

=0.15 x 100 000

= 15000

Hence, the required down payment = $15 000

We can now proceed to solve the second part of the question,

Amount borrowed (A) = Cost of house - down payment

= 100 000 - 15 000

=85 000

Now using the formula,

`P=(A)/(1000)*(table..entry\text{)}`

Looking up in the table entry, since the rate is 10.5% and the loan is being financed for 30-years, the number from the table is 9.14739 (The value you get when you check 10.5% under 30 years in tha given table).

Substitute the following values into the formula and simplify;

A= 85 000 and table entry= 9.14739

`P=(85000)/(1000)*9.14739`

`P=\text{ 777.52815}`

Hence, the monthly mortgage payment = $777.53