Question

Question #3 – Mortgage Financing

Peter and Rachael purchased a home costing $269,000. A mortgage company financed the home at a 5.5% rate and 30-year term, requiring that they make a 15% down payment. Calculate the down payment and monthly mortgage payment that Peter and Rachael must pay.

Make sure your final answer is clear and visible.
Must be in word document form.

Answer 1

(1)-Down Payment

Down Payment = Purchase price of the home x Percentage of down payment

= $269,000 x 15%

= $40,350

“Down Payment = $40,350”

(2)-Monthly Mortgage Payment

Mortgage Amount (P) = $228,650 [$269,000 - $40,350]

Monthly Interest Rate (n) = 0.458333% per month [5.50% / 12 Months]

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

Monthly Mortgage Payment = [P x {r (1+r)ⁿ} ] / [( 1+r)ⁿ – 1]

= [$228,650 x {0.00458333 x (1 + 0.00458333)³⁶⁰}] / [(1 + 0.00458333)³⁶⁰ – 1]

= [$228,650 x {0.00458333 x 5.187388}] / [5.187388 – 1]

= [$228,650 x 0.023775] / 4.187388

= $5,436.27 / 4.187388

= $1,298.25 per month

“Monthly Mortgage Payment = $1,298.25 per month”