Question

Aziza is purchasing a home worth $546,447 and is financing the purchase with a 30-year, fixed rate, fully amortizing loan at 80% LTV with 2.1% interest. What will be Aziza's monthly payments? Round your answer to the nearest cent (e.g. if your answer is $1,000.567, enter 1000.57).

Answer 1

The monthly payment is computed as shown below:

Present value = Monthly payment x [ (1 – 1 / (1 + r)ⁿ) / r ]

r is computed as follows:

= 2.1% / 12 (Since the payments are on monthly basis, hence divided by 12)

= 0.175% or 0.00175

n is computed as follows:

= 30 year x 12 months (Since the payments are on monthly basis, hence multiplied by 12)

= 360

So, the monthly payments is computed as follows:

$ 546,447 x 80% = Monthly payment x [ (1 - 1 / (1 + 0.00175)³⁶⁰ ) / 0.00175 ]

$ 437,157.6 = Monthly payment x 266.9227823

Monthly payment = $ 437,157.6 / 266.9227823

Monthly payment = $ 1,637.77 Approximately

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