HomeworkLib
Question

Suppose the house costs $200,000. You need to borrow $180,000 from the bank that you will...

Suppose the house costs $200,000. You need to borrow $180,000 from the bank that you will pay over 30 years. Assume the bank charges 3% APR on your mortgage and payments are made at the end of each month. Calculate your monthly mortgage payment. Briefly show your calculations.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
Monthly mortgage payment = Loan amount / Present value of annuity of 1
= $       1,80,000 / 237.1894
= $           758.89
Working:
Present value of annuity of 1 = (1-(1+i)^-n)/i Where,
= (1-(1+0.0025)^-360)/0.0025 i = 3%/12 = 0.0025
= 237.1893815 n = 30*12 = 360
0 0
Add a comment
Know the answer?
Add Answer to:
Suppose the house costs $200,000. You need to borrow $180,000 from the bank that you will...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Suppose you decide to borrow $180,000 for the house and you think you can pay $1,000...

    Suppose you decide to borrow $180,000 for the house and you think you can pay $1,000 at the end of every month. The bank charges 3% APR. Approximately, how long should your mortgage be (in years)? Briefly show your calculations.

  • You need $300,000 to buy a house. You decide to borrow money from the bank to...

    You need $300,000 to buy a house. You decide to borrow money from the bank to finance your mortgage. Assume that the bank charges a fixed annual interest rate of 4.50 percent and the term of the loan is 30 years. If you are required to make an equal payment every year for 30 years to pay off the loan, what is the annual payment? (Note that banks typically require monthly mortgage payments. For this problem, however, lets assume for...

  • Suppose you want to buy a house today that costs $479,312. The bank requires you to...

    Suppose you want to buy a house today that costs $479,312. The bank requires you to make a 20% down payment, but you can borrow the rest. If you are charged 5.81% APR and the mortgage is for 30 years, what is your monthly payment?

  • Suppose you want to buy a house today that costs $400,035. The bank requires you to...

    Suppose you want to buy a house today that costs $400,035. The bank requires you to make a 20% down payment, but you can borrow the rest. If you are charged 5.01% APR and the mortgage is for 30 years, what is your monthly payment?

  • You purchase a home and need to borrow $350,000. The bank is offering a 30-year loan...

    You purchase a home and need to borrow $350,000. The bank is offering a 30-year loan that requires monthly payments and has a stated interest rate of 9% per year. What is your monthly mortgage payment? Now suppose that you can only afford to pay $2,500 per month. The bank agrees to allow you to pay this amount each month, yet still borrow the original amount. At the end of the mortgage in 30 years, you must make a balloon...

  • You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash...

    You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires monthly payments and has an APR of 6% per year. What will your monthly payment be if you take this mortgage?

  • On August 1, you borrow $180,000 to buy a house. The mortgage rate is 7.0 percent....

    On August 1, you borrow $180,000 to buy a house. The mortgage rate is 7.0 percent. The loan is to be repaid in equal monthly payments over 15 years. The first payment is due on September 1. How much of the tenth payment applies to the principle balance? (Assume that each month is equal to 1/12 of a year.) Group of answer choices $543.22 $566.24 $589.28 $598.41 $615.32

  • 14) 14, You are considering purchasing a new home. You will need to borrow $270,000 to...

    14) 14, You are considering purchasing a new home. You will need to borrow $270,000 to purchase the home. A mortgage company offers you a 20-year fixed rate mortgage at 6% APR. If you borrow the money from this mortgage company, your monthly mortgage payment will be closest to: A) S3094 B) $1934 C) SI547 D) $2708 15) 15. A bank offers a loan that will requires you to pay 8% interest compounded semiannually. Which of the following is closest...

  • You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash...

    You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. You can afford to pay only $23,500 per year. The bank agrees to allow you to pay this amount each year, yet...

  • You are thinking of purchasing a house. The house costs $ 200 comma 000$200,000. You have...

    You are thinking of purchasing a house. The house costs $ 200 comma 000$200,000. You have $ 29 comma 000$29,000 in cash that you can use as a down payment on the​ house, but you need to borrow the rest of the purchase price. The bank is offering a 3030​-year mortgage that requires annual payments and has an interest rate of 6 %6% per year. What will be your annual payment if you sign this​ mortgage?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT