Question

You just took out a 15-year traditional fixed-rate mortgage for $600,000 to buy a house. The interest rate is 4.8% (APR) and you have to make payments monthly. Part 1 What is your monthly payment? Part 2 How much of your first monthly payment goes towards paying down the outstanding balance (in $)?

Answer 1

To find the monthly payment for a traditional fixed-rate mortgage, you can use the formula Monthly Payment = P * r * (1+r)^n / ((1+r)^n - 1), where P is the principal amount (loan amount), r is the monthly interest rate, and n is the total number of payments. For the outstanding balance of the first monthly payment, subtract the interest portion from the total monthly payment.

Step-by-step explanation:

To find the monthly payment for the traditional fixed-rate mortgage, we can use the formula:

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

Where:

• P = Principal amount (loan amount) = $600,000
• r = Monthly interest rate = 4.8% / 12 = 0.04
• n = Total number of payments = 15 years * 12 months/year = 180 months

Using these values, we can calculate the monthly payment:

Monthly payment = $600,000 * 0.04 * (1 + 0.04)^180 / ((1 + 0.04)^180 - 1)

Calculating this equation gives us the value of the monthly payment.

For Part 2, the amount of the first monthly payment that goes towards paying down the outstanding balance can be calculated by subtracting the interest portion from the total monthly payment. This interest portion is calculated as the outstanding balance multiplied by the monthly interest rate. The remaining amount of the monthly payment goes towards principal repayment.