Question

You want to buy a $231,000 home. You plan to pay 20% 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

Given that

Total cost of home (P)=$231000

Down payment =20% of P    =  

so down payment =46200

Time (T)=30 years

a) So the loan amount will be = Total cost (P) - Down payment =231000 - 46200= $184800

b)Now

Amount of loan (P) =$ 184800

Rate of intrest(r)=5%

Time (n) =30 year=30*12=360 month (since we have to calculate the monthly instalment )

let monthly instalment =X

then general formula for monthly instalment

so the monthly payment will be =$734.207 per month

c)Now again(P)=184800

Time (n)=30 year =30*12 =360 month

Rate of intrest (r)=6%

Let monthly payment will be =X

again from the formula

so the monthly payment will be =$756.487 per month