Final answer:
To determine the monthly payment for principal and interest, Anna needs to calculate the down payment and the loan amount. The down payment is 15% of the house price, and the loan amount is the remaining amount after the down payment. Using the formula for calculating the monthly payment for a fixed-rate mortgage, Anna can find the monthly payment by plugging in the values for the loan amount, the monthly interest rate, and the total number of monthly payments.
Step-by-step explanation:
To determine the monthly payment for principal and interest, we first need to calculate the down payment and the loan amount. Anna is required to make a 15% down payment, so the down payment amount is 15% of $235,000, which is $35,250. The loan amount is the remaining amount after the down payment, which is $235,000 - $35,250 = $199,750.
To calculate the monthly payment, we can use the formula for calculating the monthly payment for a fixed-rate mortgage: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ], where M is the monthly payment, P is the loan amount, i is the monthly interest rate, and n is the total number of monthly payments.
Since Anna's mortgage is for 25 years, the total number of monthly payments is 25 years * 12 months = 300 months. The monthly interest rate is the annual interest rate divided by 12, so i = 4% / 12 = 0.04 / 12 = 0.00333.
Plugging in the values into the formula, we get: M = $199,750 [ 0.00333(1 + 0.00333)^300 ] / [ (1 + 0.00333)^300 – 1 ]. Calculating this expression gives us the monthly payment for principal and interest, which is approximately $1,040.73.