Question

,Brad decides to purchase a \( \$ 205,000 \) house. He wants to finance the entire balance. He has received an APR of \( 3.2 \% \) for a 15 -year mortgage. What is Brad's total cost if he takes all 15

A) $205,000
B) $325,000
C) $268,368
D) $225,200
E) $180,000

Answer 1

Brad's total cost for a 15-year mortgage is $268,368.

Step-by-step explanation:

To calculate Brad's total cost for a 15-year mortgage, we can use the formula for calculating the total payment on a loan. The formula is:

Total Payment = Loan Amount * (1 + Annual Interest Rate / Number of Payments) ^ Number of Payments

First, let's calculate the number of payments. Since Brad is taking a 15-year mortgage, and the mortgage is paid on a monthly basis, the number of payments is 15 * 12 = 180.

The annual interest rate is 3.2% and the mortgage is paid on a monthly basis. So we need to convert the annual interest rate to a monthly interest rate. The monthly interest rate is 3.2% / 12 = 0.002667.

Now we can plug in the values into the formula:

Total Payment = $205,000 * (1 + 0.002667) ^ 180 = $268,368.

Therefore, Brad's total cost for the 15-year mortgage is $268,368.