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I need someone really good at math to help me please!! A home is purchased for $394,000 with a 14% down payment. Find the monthly payment if the mortgage has a 7.2% interest rate for 30 years.

User Gerd Klima
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1 Answer

6 votes

9514 1404 393

Answer:

$2300.01

Explanation:

The down payment is 14% of $394,000, so is ...

0.14 × $394,000 = $55,160

This means the principal amount of the loan is ...

$394,000 -55,160 = $338,840

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The amount of the monthly loan payment is given by the amortization formula ...

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

where P is the principal amount, r is the annual interest rate, and t is the number of years. Filling in the values, we have ...

A = $338,840(0.072/12)/(1 -(1 +0.072/12)^(-12·30))

= $338,840(0.006)/(1 -(1.006^-360)) = $2300.01

The monthly payment is $2300.01.

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Additional comment

Such calculations are commonly done using a spreadsheet, financial calculator, or app. If you're doing a number of financial calculations, it can be a good idea to obtain and learn to use an appropriate tool.

User Andrey Kachow
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