Answers:
Monthly Payment = $4,702.68
Total Payments = $846,482.40
Interest = $261,482.40
Delete the dollar signs and/or commas if needed.
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Step-by-step explanation:
The down payment is 10% of the home's value
This means that the buyer pays $65,000 up front (since 0.10*650,000 = 65,000).
The remaining 650,000 - 65,000 = 585,000 dollars is loaned in the mortgage.
Or you could write it like this 95% of 650,000 = 0.95*650,000 = 585,000
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The monthly payment formula is
P = (L*i)/( 1-(1+i)^(-n) )
where,
- P = monthly payment
- L = amount loaned
- i = interest rate per month in decimal form
- n = number of months
In this case,
- L = 585,000 dollars
- i = 0.0525/12 = 0.004375 exactly
- n = 15*12 = 180 months (equivalent to 15 years)
So,
P = (L*i)/( 1-(1+i)^(-n) )
P = (585000*0.004375)/( 1-(1+0.004375)^(-180) )
P = 4702.6846353538
P = 4702.68
The monthly payment is $4,702.68
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Let's now compute the total amount paid back (principal + interest)
If you pay 4,702.68 dollars per month over the course of 180 months, then you pay back a total of 4702.68*180 = 846,482.40
The total payments add up to 846,482.40 dollars.
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To compute the interest only, subtract the total payments from the amount loaned.
846,482.40 - 585,000 = 261,482.40 is the amount of interest only.