Imagine that you are a banker getting a loan ready for a client, Jama Hamza. They are buying a 1700 square foot home for the price of $374,500. In order to avoid PMI, Abdi puts 10% of the price as a down payment. He qualifies for a 5.68% annual interest rate for a 30-year loan.
Round all answers to the nearest cent.
Monthly Loan Payment
Loan Amount (P) = $337,050 [$374,500 x 90%]
Monthly interest rate (n) = 047333333% per month [5.68% / 12 Months]
Number of period (n) = 360 Years [30 Years x 12 Months]
Therefore, the monthly loan payment = [P x {r (1 + r)n} ] / [(1 + r)n – 1]
= [$337,050 x {0.0047333333 x (1 + 0.0047333333)360}] / [(1 + 0.0047333333)360 – 1]
= [$337,050 x {{0.0047333333 x 5.473837261}] / [5.473837261 – 1]
= [$337,050 x 0.025909496] / 4.473837261
= $8,732.80 / 4.473837261
= $1,951.97
Monthly Payment is $1,951.97
Total Loan Payment
Total Loan Payment = $1,951.97 per month x 360 Months
= $702,709.20
Total Loan Payment is $702,709.20
Total Interest Payment
Total Interest Payment = Total loan payment – Loan amount
= $702,709.20 - $337,050
= $365,659.20
Total Interest payment is $365,659.20
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