Question

A house that you are interested in has the following facts listed online: Price = $214,000 APR = 1.15% Down Payment must be 9.5% Loan time frame is 35 years What is the amount of the loan you must take out? What monthly price do you have to pay on this house? What is the total price of this house (including interest and the down payment)?

Answer 1

9514 1404 393

Answer:

• $20,330 down
• $193,670 loan
• $560.35 monthly
• $255,677 total price

Explanation:

a) The down payment is 9.5% of the price, so is ...

down = 0.095×$214,000 = $20,330

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b) The amount of the loan is the remaining value after the down payment is made:

$214,000 -20,330 = $193,670

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c) The monthly payment is given by the amortization formula:

A = P(r/12)/(1 -(1 +r/12)^(-12t))

payment on Principal P at interest rate r for t years

A = $193,670(0.0115/12)/(1 -(1 +0.0115/12)^(-12·35)) ≈ $560.35

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d) The total cost of the house is ...

down + (monthly payment)×(number of months)

= $20,330 + $560.35×420

= $255,677