Final answer:
a) The loan amount will be $218,700. b) The monthly payments at an interest rate of 6% will be $1,311.37. c) The monthly payments at an interest rate of 7% will be $1,454.34.
Step-by-step explanation:
a) To find the loan amount, we subtract the down payment from the total cost of the home. As the down payment is 10% of $243,000, it is $243,000 x 0.10 = $24,300. Therefore, the loan amount will be $243,000 - $24,300 = $218,700.
b) To calculate the monthly payments at an interest rate of 6% on a 30 year loan, we can use the formula for the monthly payment of a mortgage:
Monthly Payment = Loan Amount x Monthly Interest Rate / (1 - (1 + Monthly Interest Rate)^(-Number of Payments))
Substituting the values, we get:
Monthly Payment = $218,700 x (0.06 / 12) / (1 - (1 + 0.06 / 12)^(-30 x 12)) = $1,311.37
Therefore, the monthly payments at an interest rate of 6% will be $1,311.37.
c) Using the same formula, the monthly payments at an interest rate of 7% can be calculated as:
Monthly Payment = $218,700 x (0.07 / 12) / (1 - (1 + 0.07 / 12)^(-30 x 12)) = $1,454.34
Therefore, the monthly payments at an interest rate of 7% will be $1,454.34.