Question

You found your dream house. It will cost you $250,000 and you will put down $50,000 as a down payment. For the rest you get a 30 year 4.5% APR mortgage. What will be your monthly mortgage payment (assume no early repayment)?

A. $694.44
B. $1,023.19
C. $1,013.37
D. $862.89

Answer 1

The monthly mortgage payment for the house will be approximately $1,013.37.

Step-by-step explanation:

To calculate the monthly mortgage payment, we can use the formula:

M = P [ i(1 + i)^n ] / [ (1 + i)^n - 1 ]

Where:

M = monthly mortgage payment

P = loan amount - down payment

i = monthly interest rate (APR divided by 12)

n = total number of monthly payments (30 years multiplied by 12)

In this case, the loan amount is $250,000 - $50,000 (down payment) = $200,000, the monthly interest rate is 4.5% divided by 12 = 0.375%, and the total number of monthly payments is 30 years multiplied by 12 = 360 months.

Plugging these values into the formula:

M = $200,000 [ 0.00375(1 + 0.00375)^360 ] / [ (1 + 0.00375)^360 - 1 ]

Calculating this will give us a monthly mortgage payment of approximately $1,013.37.