subject is purchasing a home for $45,00.00 with $5,000.00 down payment @ 11% interest. Will this be covered in 10 years and how much payment per month?
To determine if the purchase of a home for $45,000.00 with a $5,000.00 down payment at an 11% interest rate can be covered in 10 years, we need to calculate the monthly mortgage payment.
First, we need to subtract the down payment from the purchase price to calculate the loan amount:
Loan Amount = Purchase Price - Down Payment
Loan Amount = $45,000.00 - $5,000.00
Loan Amount = $40,000.00
Next, we can use the loan amount and the interest rate to calculate the monthly mortgage payment using the formula for a fixed-rate mortgage:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
where:
M = Monthly Mortgage Payment
P = Loan Amount
i = Monthly Interest Rate (annual interest rate divided by 12)
n = Total Number of Payments (number of years multiplied by 12)
Let's calculate the monthly mortgage payment:
P = $40,000.00
i = 11% / 12 = 0.00917 (monthly interest rate)
n = 10 years * 12 = 120 (total number of payments)
M = $40,000.00 [ 0.00917(1 + 0.00917)^120 ] / [ (1 + 0.00917)^120 – 1 ]
Using a calculator or spreadsheet, we can compute the value of M, which will give us the monthly mortgage payment.
After calculating, the monthly mortgage payment for a 10-year term with a $40,000.00 loan amount at an 11% interest rate is approximately $456.92.
Therefore, the monthly payment for this loan is approximately $456.92.