Question

You want to buy a $205,000 home. You plan to pay 10% as a down
payment, and take out a 30 year loan for the rest.

a) How much is the loan amount going to be?

$

b) What will your monthly payments be if the interest rate is
5%?

$

c) What will your monthly payments be if the interest rate is
6%?

$

Answer #1

**(a)-The loan
amount**

The loan amount = Purchase price of home – Down payment

= $205,000 – [$205,000 x 10%]

= $205,000 - $20,500

= 184,500

**(b)-Monthly loan
payment if the interest rate is 5.00%**

Loan Amount (P) = $184,500

Monthly Interest Rate (n) = 0.416667% per month [5.00% / 12 Months]

Number of months (n) = 360 Months [30 Years x 12 Months]

Therefore, the Monthly Loan Payment
= [P x {r (1 + r)^{n}} ] / [(1 + r)^{n} – 1]

= [$184,500 x {0.00416667 x (1 +
0.00416667)^{360}}] / [(1 + 0.00416667)^{360} –
1]

= [$184,500 x {0.00416667 x 4.4677443}] / [4.4677443 – 1]

= [$184,500 x 0.0186156] / 3.4677443

= $3,434.58 / 3.4677443

= $990.44 per month

**(c)-Monthly loan
payment if the interest rate is 6.00%**

Loan Amount (P) = $184,500

Monthly Interest Rate (n) = 0.50% per month [6.00% / 12 Months]

Number of months (n) = 360 Months [30 Years x 12 Months]

Therefore, the Monthly Loan Payment
= [P x {r (1 + r)^{n}} ] / [(1 + r)^{n} – 1]

= [$184,500 x {0.005 x (1 +
0.005)^{360}}] / [(1 + 0.005)^{360} – 1]

= [$184,500 x {0.005 x 6.0225752}] / [6.0225752 – 1]

= [$184,500 x 0.0301129] / 5.0225752

= $5,555.83 / 5.0225752

= $1,106.17 per month

You want to buy a $258,000 home. You plan to pay 10% as a down
payment, and take out a 30 year loan for the rest.
a) How much is the loan amount going to?
b) What will your monthly payments be if the interest rate is
6%?
c) What will your monthly payments be if the interest rate is
7%?

You want to buy a $245,000 home. You plan to pay 10% as a down
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b) What will your monthly payments be if the interest rate is
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$
c) What will your monthly payments be if the interest rate is
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$

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what will the monthly payments be if the interest rate is at
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b) What will your monthly payments be if the interest rate is
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c) What will your monthly payments be if the interest rate is
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c) What will your monthly payments be if the interest rate is
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$
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$
c) What will your monthly payments be if the interest rate is
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$
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