A couple has just purchased a home for $348,400.00. They will pay 20% down in cash, and finance the remaining balance. The mortgage broker has gotten them a mortgage rate of 5.04% APR with monthly compounding. The mortgage has a term of 30 years. What is the monthly payment on the loan?
$1,503.05
Working:
| Monthly Payment | = | Loan Amount/cumulative disocount factor | ||||||||
| = | $ 2,78,720.00 | / | 185.43624 | |||||||
| = | $ 1,503.05 | |||||||||
| Working: | ||||||||||
| Loan Amount | = | $ 3,48,400.00 | x | (1-0.20) | = | $ 2,78,720.00 | ||||
| Cumulative discount factor | = | (1-(1+i)^-n)/i | Where, | |||||||
| = | (1-(1+0.0042)^-360)/0.0042 | i | 5.04%/12 | = | 0.0042 | |||||
| = | 185.43624 | n | 30*12 | = | 360 | |||||
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