Question

Question 2You buy a house for $299,000. If you make a 20% down payment, how much will your principal and interest payment be per month if you take out a 30 year loan with an interest rate of 4.25%.

Answer 1

The price of the house is $29900

At first you paid 20% of that price, to calculate how much the down payment was you have to do as follows:

`299000\cdot0.2=59800`

The down payment was $59800 and there are $299000-$59800=$239200 left to pay.

From this $239200 you have to calculate the interest rate:

$239200*0.0425= $10166 → this represents the total interest rate you'll pay

This is a 30 year loan, which means you'll pay

30*12=360

for 360 months

Divide the principal payment $239200 by 360 to calculate the monthly fee:

`(239200)/(360)=664.44`

Do the same with the total interest rate:

`(10166)/(360)=28.24`

Monthly you'll pay $664.44 plus $28.24 of interest, that adds up for a total of $692.68