Question

a. Compute the monthly mortgage payment for a $200,000 mortgage loan for 30 years with a contract rate of 4.5%. b. What is the payment for a 15 Year $200,000 loan at a rate of 3.875%?

Answer 1

a. Compute the monthly mortgage payment for a $200,000 mortgage loan for 30 years with a contract rate of 4.5%.

EMI = [P * I * (1+I)^N]/[(1+I)^N-1]

P =loan amount or Principal = 200000

I = Interest rate per month = .045/12
N = the number of installments = 30*12 = 360

EMI = [200000*.045/12* (1+(.045/12))^360]/[(1+(.045/12))^360-1]

= [200000*.045/12* 3.84769804996]/[3.84769804996-1]

= 2885.77353747/2.84769804996

= 1013.37

b. What is the payment for a 15 Year $200,000 loan at a rate of 3.875%?

EMI = [P * I * (1+I)^N]/[(1+I)^N-1]

P =loan amount or Principal = 200000

I = Interest rate per month = .03875/12
N = the number of installments = 15*12 =180

EMI = [200000*.03875/12* (1+(.03875/12))^180]/[(1+(.03875/12))^180-1]

= [200000*.03875/12* 1.78659851105]/[1.78659851105-1]

= 1153.84487172/0.78659851105

= 1466.88