Cali is purchasing a house. The house can be bought for $225 000. She negotiates with
her bank and can get a mortgage for 90% of the cost at 4.9% compounded monthly,
with regular monthly payments for 25 years.
a) How much will the down payment be?
b) How much will the principal of the mortgage be?
c) What will the regular payment amount be?
d) How much interest will she pay in all?
a) 225,000 - 202,500 ==$22,500 - down payment on the mortgage.
b) 225,000 x 0.90 ==$202,500 - principal amount of mortgage.
c) N=25*12; R=0.049/12;PV=202500; PMT=PV*R*((1 + R)^N) / ((1 + R)^(N) - 1)==Mortgage payment: $ 1,172.03 - monthly payments.
d) [$1,172.03 x 25 years x 12 months] - $202,500 ==$149,109.00 total interest on the mortgage.