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4 March, 03:31

anna is buying a house selling for 185,000. to obtain the mortgage, anna is required to make a 20% down payment. anna obtains a 25-year mortgage with an interest rate of 6%. a) determine the amount of the required down payment b) determine the amount of the mortgage c) determine the monthly payment for principal and interest

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  1. 4 March, 05:40
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    a. The Amount of the required down payment is $37,000

    b. The amount of the mortgage is $148,000

    c. The monthly payment for principal and interest is $953.62 per month

    Step-by-step explanation:

    a) In order to calculate the Amount of the required down payment we would have to use the following formula:

    Amount of down payment = Value of home x Required down payment percentage

    = $185,000 x 20%

    = $37,000

    b) In order to calculate the Amount of the mortgage we would have to use the following formula:

    Amount of the mortgage = Value of home - Down payment

    = $185,000 - $37,000

    = $148,000

    c) Loan Amount (P) = $148,000

    Monthly Interest Rate (n) = 0.5% per month [6.00% / 12 Months]

    Number of months (n) = 300 Months [25 Years x 12 Months]

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

    = [$148,000 x {0.005 x (1 + 0.005) ∧300}] / [ (1 + 0.005) ∧300 - 1]

    = [$148,000 x {0.005 x 4.464}] / [4.464 - 1]

    = [$148,000 x 0.02232] / 3.464

    = $3,303.36 / 3.464

    = $953.62 per month

    The monthly payment for principal and interest is $953.62 per month
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