Question

Bianca bought a home for $190,000 with a down payment of $19,000 at 7% for 25 years. since then the rate has risen to 8%. how much more would her monthly payment be if she bought the house at 8%

Answer 1

To calculate the monthly payment, use the formula: Monthly Payment = P * (r * (1 + r)^n) / ((1 + r)^n - 1), where P is the principal amount, r is the monthly interest rate, and n is the number of monthly payments. Calculate the monthly payments for the house bought at 7% and 8% interest rates, then find the difference between the two. The difference in monthly payments would be approximately $45.32 more for the house bought at an 8% interest rate.

Step-by-step explanation:

To calculate the monthly payment for the house bought at a 7% interest rate, we can use the formula:

Monthly Payment = P * (r * (1 + r)n) / ((1 + r)n - 1)

Where:

• • P is the principal amount, which is $190,000 - $19,000 = $171,000 (since the down payment is deducted from the total price)
  • r is the monthly interest rate, which is 7% / 12 = 0.00583
  • n is the number of monthly payments, which is 25 years * 12 months/year = 300 months

Now we can calculate the monthly payment:

Monthly Payment = $171,000 * (0.00583 * (1 + 0.00583)300) / ((1 + 0.00583)300 - 1) = $1,204.46

To calculate the monthly payment for the house bought at 8% interest rate, we can use the same formula with a different interest rate:

Monthly Payment = $171,000 * (0.00667 * (1 + 0.00667)300) / ((1 + 0.00667)300 - 1) = $1,249.78

The difference in monthly payments would be:

$1,249.78 - $1,204.46 = $45.32

So, if Bianca bought the house at 8% interest rate, her monthly payment would be approximately $45.32 more.