Question

What will be the monthly payment if you take out a $240,000 20-year mortgage at an interest rate of 1% per month?

Answer 1

The monthly payment for a $240,000 20-year mortgage at a 1% monthly interest rate is approximately $1,855.62.

Step-by-step explanation:

To calculate the monthly payment for a mortgage, you can use the formula

Payment = Loan Amount * Monthly Interest Rate / (1 - (1 + Monthly Interest Rate)^(-Number of Months)

For this scenario, the loan amount is $240,000, the interest rate is 1% per month, and the loan term is 20 years (240 months).

First, let's convert the interest rate to decimal form: 1% = 0.01

Next, we'll calculate the monthly interest rate: Monthly Interest Rate = 0.01 / 12

Now we can substitute the values into the formula:

Payment = $240,000 * (0.01/12) / (1 - (1 + (0.01/12))^(-240))

Using a calculator or spreadsheet, the monthly payment comes out to be approximately $1,855.62.