Posted by **Caleb** on Thursday, September 4, 2008 at 10:19pm.

How would you solve this math equation?

this is really confusing to me.

Ms.Martin was researching the costs of financing $125,000 for a home. She found that the monthly payment for a 6.875% loan for 30 years would be $821.16 per month. She found that the monthly payment for a 6.875% loan for 20 years would be $959.77 per month.

1. Write and solve an equation to find the amount of interest she would pay altogether for the 30-year loan.

2. Write and solve an equation to find the amount of interest she would pay altogether for the 20-year loan.

3. For which loan would she pay less interest? How much would she save with that loan?

4. A loan officer tells Ms. Marin that her payment should be no more than 25% of her gross monthly income (income before taxes). How much must Ms. Martin gross yearly salary be in order to borrow $125,000 for each loan?

- algebra -
**drwls**, Friday, September 5, 2008 at 5:18am
1. The amount of interest paid is total payments minus the initial value of the loan. This in the first case (30 years), the interest paid is

360*821.16 - 125,000 = 170,617.60

2. Fot a 20 year loan, the interest paid is

(240)*959.77-125,000 = 105,344.80

3. Compare the results of 1 and 2.

4. She must earn (before taxes) four times the payment. Compute this for each loan type.

## Answer This Question

## Related Questions

- Math - The Washingtons buy a $260,000 home by putting 20% down and financing ...
- business math - financing furniture that costs $4200.00 with a two year ...
- Math - 4. Vanna has just financed the purchase of a home for $200 000. She ...
- Math - 4. Find the monthly payment for the loan. (Round your answer to the ...
- Math - Shantle and Kwamie are planning to buy their first home. Although they ...
- Maths Check - Can Please someone check as per below I posted this yesterday and ...
- Math - A buyer is paying a reduced $500 in closing costs on a home with a sale ...
- Algebra: Statistics - Five years ago, you bought a house for $151,000, with a ...
- Financing - A. How much might a home buyer expect to pay in closing costs on a $...
- math - A couple purchasing a home budget $1700 per month for their loan payment...

More Related Questions