Denise and David purchased a home in Dallas, Texas. In February 2003 for $250,000. They were able to make a down payment of $80,000, and borrowed the rest through a 15 year mortgage at 4.5% compounded semi-annually.
If they make equal monthly payments, how much is each payment?
So the balance to be mortgaged is 170 000
I am not sure if the rules for mortgage rates are the same in the US as they are in my Canada, but in general the interest period must coincide with the payment period, we have monthly payments but semi-annual compounding.
must find the equivalent monthly rate, let that rate be i
(1+i)^12 = 1.0225)^2
1+i = 1.0225^(1/6) = 1.00371532
i = .00371532
let the payment be P
P( 1 - 1.00371532^-180 )/.00371532 = 170 000
P = ....
I got $1296.88