Question

Jadyn is looking to purchase a home for $182,000 and will make a $40,000 down payment in order to borrow the remainder. Jadyn’s bank is offering a monthly interest rate of .351% for a 15-year mortgage. What is Jadyn’s monthly mortgage payment to the nearest dollar?

HINT: The interest rate provided in this question is monthly.

Answer 1

Answer: Jadyn’s monthly mortgage payment is $812

Explanation:

The cost of the house is $182,000.

The down payment made is $$40,000. The balance to be paid would be

182000 - 40000 = $142000

We would apply the periodic interest rate formula which is expressed as

P = a/[{(1+r)^n]-1}/{r(1+r)^n}]

Where

P represents the monthly payments.

a represents the amount of the loan

r represents the annual rate.

n represents number of monthly payments. Therefore

a = $142000

r = 0.00351/12 = 0.000293

n = 12 × 15 = 180

Therefore,

P = 142000/[{(1+0.000293)^180]-1}/{0.000293(1+0.000293)^180}]

142000/[{(1.000293)^180]-1}/{0.000293(1.000293)^180}]

P = 142000/{1.054 -1}/[0.000293(1.054)]

P = 142000/(0.054/0.0003088)

P = 142000/174.87

P = $812