Question

# You want to buy a home for \$207,000. Your plan to pay 10% as a down...

You want to buy a home for \$207,000. Your plan to pay 10% as a down payment, and take out a 30 year loan for the rest.

How much is the amount going to be?

what will the monthly payments be if the interest rate is at 5%?

What will your monthly payments be if the interest rate is 6%?

Solution :-

Price of House = \$207,000

Down Payment = 10% * \$207,000 = \$20,700

(A) Amount Financed = \$207,000 - \$20,700 = \$186,300

(b) In case of 30 Year loan

Total Monthly Payments = 30 * 12 = 360

Interest Rate Per Month = 5% / 12 = 0.4167%

Now Monthly Installment = Amount Financed / PVAF ( r , n )

= \$186,300 / PVAF ( 0.4167% , 360 )

= \$186,300 / 186.281

= \$1,000.10

Monthly Payment = \$1,000 ( Approx )

(c) In case interest rate 6%

Interest Rate per month = 6% / 12 = 0.50%

Now Monthly Installment = Amount Financed / PVAF ( r , n )

= \$186,300 / PVAF ( 0.50% , 360 )

= \$186,300 / 166.7916

= \$1,116.96