Question

The price of a condominium is

​$103,000.

The bank requires a​ 5% down payment and one point at the time of closing. The cost of the condominium is financed with a​ 30-year fixed-rate mortgage at 8.5%.

Use the following formula to determine the regular payment amount.

a. Find the required down payment.

​$

b. Find the amount of the mortgage.

​$

c. How much must be paid for the one point at​ closing?

​$

​(Round to the nearest dollar as​ needed.)

d. Find the monthly payment​ (excluding escrowed taxes and​ insurance).

​$

​(Round to the nearest dollar as​ needed.)

e. Find the total cost of interest over 30 years.

​$

Answer 1

a) The required down payment is = $(103000*5%) = $(103000*5/100) = $5150.

b) The amount of the mortgage is = $(103000-5150) = $97850.

c) The amount must be paid for the one point at closing is = $(97850*1%) = $(97850*1/100) = $978.5 $979.

d) Here, present value : PV = $97850

And, interest rate per period : r = [8.50-(2*0.25)]%/12 = 8%/12 = 0.08/12

And, time : n = (30*12) months = 360 months.

If P be the monthly payment, then we have,

i.e.,

i.e.,

Therefore, the monthly payment is $718.

e) The total cost of interest over 30 years is = $[(718*360)-97850] = $[258480-97850] = $160630.