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Suppose you want to buy a house that costs $850,000. You are required to put 10%...

Suppose you want to buy a house that costs $850,000. You are required to put 10% down, which means the amount to be borrowed is 90% of the price of the house. If you want a 30 year mortgage, and the borrowing rate is 5.3% APR, what would be your monthly payment? (Answer to the nearest penny)

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Answer #1

Information provided:

Cost of the house= $850,000

Mortgage= Present value =0.90*$850,000= $765,000.

Time= 30 years*12= 360 months

Interest rate= 5.3%/12= 0.4417% per month

The monthly payment is calculated by entering the below in a financial calculator:

PV= -765,000

N= 630

I/Y= 0.4417

Press the CPT key and PMT to calculate the amount of monthly payment.

The value obtained is 4,248.09.

Therefore, the amount of monthly payment is $4,248.09.

In case of any query, kindly comment on the solution.

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