Question

The Gomez family bought a house for $175,000. They paid 20% down and amortized the rest with a 30-year fixed mortgage loan at 4.5% compounded monthly. Find their monthly loan payment.

Answer 1

Cost of house

$       1,75,000

Less:Down Payment

$           35,000

Balance

$       1,40,000

/Present value of annuity of 1

197.361159

Monthly loan payment

$ 709.36

Working:

Present value of annuity of 1

=

(1-(1+i)^-n)/i

Where,

=

(1-(1+0.00375)^-360)/0.00375

i

4.5%/12

=

0.00375

=

197.361159

n

30*12

=

360