Question

I want to buy a house. The house costs $1,000,000. I put 20% down and borrow the rest. If the mortgage is 30 years, and the rate is 4.5%, what is the monthly payment?

Answer 1

We need to calculate the monthly payment in this. Let's see what we have been given:

Cost of house = $1,000,000

Amount paid = 20%

Unpaid amount or the loan = 80% of $1,000,000 = $800,000

Time to loan = 30 years (since monthly payment is to be made, it translates to 30*12= 360 periods)

Rate of interest = 4.5% (This is also annual, it needs to be divided by 12 for monthly calculation)

Now, we need to use +PMT function in excel like this to calculate monthly payment:

The answer is $4,053.48. It is negative since it is representing the cash ouflow.