Question

Derek borrows $282,135.00 to buy a house. He has a 30-year mortgage with a rate of 4.67%. The monthly mortgage payment is $________. Currency: Round to: 2 decimal places.

Answer 1

By the formula Method

Monthly mortgage= Loan amount/ ((1-1/(1+rate)^number of terms)/rate)

= 282135/((1-1/(1+4.67%/12)^360)/(4.67%/12))

=282135/ 193.484905

= $1458.18

Using Excel, we can compute the monthly mortgage with the PMT function as follows

=PMT(4.67%/12,30*12,-282135)

where

4.67%/12 is the monthly rate

30*12 is the term in months

282135 is the PV of loan amount