Rebecca and Tom Payton have decided to buy a home that costs $200,000. The Paytons can put down 20% of the home's price. They have applied for a 15-year, 9% FRM to finance the balance. They Paytons have a combined gross annual income of $70,000.
How much will the Paytons pay to satisfy their mortgage loan, if they make all the payments on time for the amount being financed?
20% down, so there is P=$160000 left for the mortgage.
Period, n = 15 years
rate = 15%,
rate multiplier, R = 1.15
Assume interest is compounded yearly.
Let Yearly payment = A
then A is given by the mortgage formula
PR^n = A(R^n-1)/(R-1)
or
A=PR^n*(R-1)/(R^n-1)
=160000*1.15^15*(1.15-1)/(1.15^15-1)
=27,362.73
Monthly payment
=27,362.73/12
=2280.23
uhm..it's a multiple choice questions and that isn't one of the choices :/
To calculate how much the Paytons will pay to satisfy their mortgage loan, we can follow these steps:
Step 1: Calculate the down payment
The Paytons are putting down 20% of the home's price, which is $200,000.
So, the down payment amount is 20% of $200,000 = 0.2 * $200,000 = $40,000.
Step 2: Calculate the loan amount
The loan amount is the difference between the home price and the down payment.
Loan amount = Home price - Down payment
Loan amount = $200,000 - $40,000 = $160,000.
Step 3: Calculate the monthly payment
To calculate the monthly payment, we can use the formula for calculating the monthly payment on a fixed-rate mortgage (FRM):
Monthly payment = Loan amount * (Monthly interest rate / (1 - (1 + Monthly interest rate)^(-total number of months)))
In this case, the loan term is 15 years, which means the total number of months is 15 * 12 = 180 months.
The interest rate is 9% per year, so the monthly interest rate is 9% / 12 = 0.09 / 12 = 0.0075.
Plugging in the values:
Monthly payment = $160,000 * (0.0075 / (1 - (1 + 0.0075)^(-180)))
Monthly payment = $1,509.51 (rounded to the nearest cent).
Step 4: Calculate the total amount paid over the term of the loan
To find the total amount paid over the term of the loan, we can multiply the monthly payment by the total number of months:
Total amount paid = Monthly payment * Total number of months
Total amount paid = $1,509.51 * 180 = $271,711.80.
Therefore, the Paytons will pay a total of $271,711.80 to satisfy their mortgage loan if they make all the payments on time for the amount being financed.