Question

Liz is buying a home for $426,000. She is making a 22% down payment and financing the rest with a 20-year loan at 5.25% interest. What will her total payment for the home be? Round your answer to the nearest dollar. Use a mortgage table to find the monthly mortgage payment per 1000 dollars borrowed.

Answer 1

$631,057

Step-by-step explanation:

I took the test.

Answer 2

• $869,776

Step-by-step explanation:

1. Mortgage table

Find attached a sample of a mortgage table per 1,000 dollars borrowed.

You have to use the number in the intersection of the row for 5.25% interest and the column for 20 years.

The number is $6.74.

That means that, for every $1,000 borrowed for 20 years at 5.25% interest you will pay $6.74 every month.

2. Amount borrowed

You will make a 22% down payment:

`22\%* \$ 426,000=\$ 93,720`

Thus the amount borrowed is $426,000 - $93,720 = $332,280

3. Monthly payment

Multiply the monthly payment per 1,000 by the amount borrowed divided by 1,000:

`\$ 6.74* 322,280/1,000=\$ 2,239.57`

4. Total monthly payments:

Multiply the number of payments by the monthly payment.

Number of payments = 20 years × 12 payments /year = 240 payments.

`\$ 2,239.57* 240=\$ 537,496.13`

5. Total payment for the home.

The total payment for the home will be the down payment plus the amount paid to the bank:

• $322,280 + $537,496 = $869,776