Question

Jason and Pam recently bought a house. They financed the house with a $250,000, 30-year mortgage with a nominal interest rate of 77% compounded monthly. Mortgage payments are made at the end of each month. What would be their house payment?

Answer 1

Annual payument (PMT)= $1,663.19

Explanation:

Giving the following information:

Loan (PV)= $250,000

Monthly interest rate (i)= 0.07/12= 0.005833

Number of periods (n)= 12*30= 360 months

To calculate the monthly payment, we need to use the following formula:

Annual payument (PMT)= (PV*i) / [1 - (1+i)^(-n)]

Annual payument (PMT)= (250,000*0.005833) / [1 - (1.005833^-360)]

Annual payument (PMT)= $1,663.19