Question

Vanessa bought a house for $268,500. She has a 30 year mortgage with a fixed rate of 6.25%. Vanessa's monthly payments

are $1,595.85. How much was Vanessa's down payment?
a. $9,314.45
b. $16,781.25
C. $40,275.00
d. $53,040.00
Please select the best answer from the choices provided
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Answer 1

A.$9,314.45.

Explanation:

The formula for the calculationg of the payment amount during the loan amortization: A = P * (r*( 1+r )^n /(( 1+r )^n - 1 )). Here: A = $1,595.85, n = 12 x 30 = 360, p = 6.25 % so r = 0.0625 : 12 = 0.0052, Therefore: 1,585.95 = P * ( 0.0052 * 1.0052^(360) / 1.0052^(360) ) ; 1585.95 = P * ( 0.0052 * 6.4698 / 5.4698 ) : P = 1,585.95 : 0.0061; P = $259,185.55. Finally the down payment is: 268,500 - 259,185.55 = $9,314.45. Answer: A ) $9,314.45.