Question

5. Ten years ago, a couple bought a house for $250,000 with 10% down and a 25 year mortgage with an interest rate of 6.2% a year. What were the monthly payments?

Answer 1

Information provided:

Cost of the house= $250,000

Down payment= 10%*$250,000= $25,000

Mortgage=  $250,000 - $25,000= $225,000

Time= 25 years - 10 years= 15 years*12= 180 months

Monthly interest rate= 6.2%/12= 0.5167%

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

PV= -225,000

N= 180

I/Y= 0.5167

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

The value obtained is 1,923.08.

Therefore, the monthly mortgage payment is $1,923.08.