Final answer:
To calculate the monthly payment for a mortgage, use the mortgage payment formula: PMT = P*(r*((1+r)^n))/(((1+r)^n)-1). Calculate the monthly payments for both a 20-year mortgage and a 30-year mortgage using this formula. Then, find the difference in the payments.
Step-by-step explanation:
To calculate the monthly payment for a mortgage, we can use a formula known as the mortgage payment formula. This formula is given by:
PMT = P*(r*((1+r)^n))/(((1+r)^n)-1)
Where:
PMT: Monthly payment
P: Loan amount
r: Monthly interest rate (annual interest rate divided by 12)
n: Total number of payments
In this case, Stephen has agreed to pay a certain percentage of the purchase price as a down payment. Let's say the purchase price is $X and he is paying Y% of it as a down payment. Then, the loan amount (P) is given by $X - (Y/100)*$X.
To compare the monthly payment for a 20-year mortgage and a 30-year mortgage, we need to calculate the monthly payments using the mortgage payment formula for both cases and then find the difference in the payments.