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Suppose you are buying your first house for $360,000, and you will make a $60,000 down payment. You will finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6% nominal interest rate. What will be your first monthly payment?

Answer :

Kolawole845

Answer:

Equal monthly  installment= $1,798.65

Explanation:

The remainder to be financed is computed as follows:

Cost of house - down payment =

=  $360,000 - $60,000

=  $300,000.00

Equal monthly installment = Loan amount / annuity factor

Annuity factor = (1- (1+r) ^(-n))/r

r-  interest rate per period = 6%/12 = 0.5% per month

n- number of period = =30× 12 = 360 months

Annuity factor = (1 - (1.005)^(-360))/0.005

                      = 166.7916144

Equal monthly  installment

= 300,000/166.791

= 1,798.65

Equal monthly  installment= $1,798.65

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