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The Counties are planning to purchase a new home that costs $150,000. The bank is charging...

  1. The Counties are planning to purchase a new home that costs $150,000. The bank is charging them 5 ½ % interest and requires a 20% down payment. The Counties are planning to take a 30-year mortgage. How much is their monthly payment be for principal and intrest ?
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Answer #1

Information provided:

Cost of new home= $150,000

Down payment= 20%*$150,000= $30,000

Mortgage= $150,000 - $30,000= $120,000

Time= 30 years*12= 360 months

Monthly interest rate= 5.50%/12= 0.4583%

The monthly mortgage payment is calculated by entering the below in a financial calculator:

PV= -120,000

N= 360

I/Y= 0.4583

Press the CPT key and PMT to compute the monthly mortgage payment.

The value obtained is 681.35.

Therefore, the monthly mortgage payment for principal and interest is $681.35.

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