Final answer:
The monthly payment necessary to amortize a $140,000 loan at 2.375% interest for 15 years is approximately $924.57. The calculation involves the loan's present value, the monthly interest rate, and the total number of payments.
Step-by-step explanation:
Finding the Monthly Payment for a Home Loan
To find the monthly payment necessary to amortize a $140,000 loan at 2.375% interest for 15 years from Discover Home Loans, one would typically use the formula for the fixed monthly payment on an amortizing loan, which can be derived from the present value of an annuity formula.
The fixed monthly payment formula is:
P = [rPv] / [1 - (1 + r)^-n]
Where:
- P is the monthly payment
- r is the monthly interest rate (annual rate / 12)
- Pv is the present value or principal amount of the loan
- n is the total number of payments (years * 12)
Plugging in the numbers, we get:
r = 2.375% / 12 = 0.00197917
n = 15 * 12 = 180
P = [0.00197917 * 140,000] / [1 - (1 + 0.00197917)^-180]
After calculating, the monthly payment (P) comes out to approximately $924.57. This means that to amortize the loan, the monthly payment would be roughly $924.57.