1. You are purchasing a home for $145,000.In order to get a 30 year fixed mortgage rate of 4.5%, the bank requires a 20% down payment.
b. What is the monthly payment?
c. How much interest is paid over the life of the loan?
$145,000 x 20% =$29,000.00 - down payment required.
$145,000 - $29,000 =$116,000 - amount of mortgage to be borrowed.
PMT=PV. R.{[1 + R]^N/ [1 + R]^N - 1} - This is the formula you would use to calculate the monthly payment:
$587.75 - The monthly payment on the mortgage.
$587.75 x 360 months = $211,590.00 - Principal + interest that must be paid over a period of 30 years or 360 months.
$211,590.00 - $116,000 =$95,590.00 - Total amount of interest on the mortgage.
