Question

you want to buy a house that costs $380612.98, but all you can afford to pay on a weekly mortgage for the house is $4596.87 per week for 29 years. thanks bank quoted you a mortgage rate of 5.05% to buy this house without putting any money down or having a balance owing at the end of the mortgage, you would have get the bank to lend you money at a lowest rate. what rate would they have to quote you to make this work?

Answer 1

Computation of Rate = RATE(nper, pmt, pv)

• Nper    Required. The total number of payment periods in an annuity. = 29 Years * 52 weeks = 1508 Weeks

• Pmt    Required. The payment made each period and cannot change over the life of the annuity. = $4596.87

• Pv    Required. The present value — the total amount that a series of future payments is worth now. = $380612.98

RATE(nper, pmt, pv)

RATE(1508, 4596.87, -380612.98)

Weekly rate = 1.208%

Yearly rate = Weekly Rate * 52 Weeks

Yearly rate = 62.80%

The Bank has to quote you the mortgage rate of 62.80% to make your payment per week of $4596.87 for 29 years match with the loan amount of $380612.98

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