Question

Calculate how much you can borrow with a $900 per payment with a 15 year mortgage a $180,000 house and a rate at 6.890%

Answer 1

To calculate how much you can borrow for a mortgage, you can use the mortgage loan formula:


`\[ P = (A * r * (1 + r)^n)/((1 + r)^n - 1) \]`

Where:

P - is the loan amount (how much you can borrow),

A - is the monthly payment,

r - is the monthly interest rate (annual rate divided by 12 and converted to a decimal),

n - is the total number of payments (loan term in years multiplied by 12).

Given the following values:

Monthly payment (A): $900

Loan term: 15 years

Annual interest rate: 6.890%

House price: $180,000

First, convert the annual interest rate to a monthly rate:

`\[ r = (0.0689)/(12) \]`

Now, calculate the total number of payments:

`\[ n = 15 * 12 \]`

Now, plug these values into the loan formula to find the loan amount (P):

`\[ P = (900 * 0.00574 * (1 + 0.00574)^(180))/((1 + 0.00574)^(180) - 1) \]`

It's your turn to calculate :)