Suppose that you want to purchase a home for $450,000 with a 30 year mortgage at 6% interest. Suppose that you can put 30% down. Assume that the monthly cost to finance $1,000 is $6.00. What are the monthly payments?

Question

Suppose that you want to purchase a home for $450,000 with a 30 year mortgage at 6% interest. Suppose that you can put 30% down. Assume that the monthly cost to finance $1,000 is $6.00. What are the monthly payments?

Steps or examples please

Answer 1

Thanks. But I am trying to figure out how did you get $2138.18 I did the calculations but I do not come up with your answer.

Answer 2

To calculate the monthly payments for a mortgage, we need to consider the principal amount, the interest rate, and the loan term. In this case, the principal amount is the purchase price minus the down payment, the interest rate is 6%, and the loan term is 30 years.

Here are the steps to calculate the monthly payments:

Step 1: Calculate the loan amount:
The down payment is 30% of the purchase price, so to calculate the loan amount, subtract the down payment from the purchase price:
Loan Amount = Purchase Price - Down Payment
Loan Amount = $450,000 - (30% * $450,000)
Loan Amount = $450,000 - $135,000
Loan Amount = $315,000

Step 2: Convert the annual interest rate to a monthly interest rate:
The annual interest rate is 6%. To calculate the monthly interest rate, divide the annual interest rate by 12:
Monthly Interest Rate = Annual Interest Rate / 12
Monthly Interest Rate = 6% / 12
Monthly Interest Rate = 0.06 / 12
Monthly Interest Rate = 0.005

Step 3: Calculate the number of monthly payments:
The loan term is 30 years, so the number of monthly payments will be 30 * 12 = 360.

Step 4: Use the loan amount, monthly interest rate, and number of monthly payments to calculate the monthly payments using the formula for a fixed mortgage payment:

Monthly Payment = Loan Amount * (Monthly Interest Rate * (1 + Monthly Interest Rate)^Number of Payments) / ((1 + Monthly Interest Rate)^Number of Payments - 1)

Plugging in the values:

Monthly Payment = $315,000 * (0.005 * (1 + 0.005)^360) / ((1 + 0.005)^360 - 1)

After calculating this equation, the monthly payment would be approximately $1,889.08.

Therefore, the monthly mortgage payment for a $450,000 home with a 30-year mortgage at 6% interest, and a 30% down payment would be approximately $1,889.08.

Answer 3

"..the monthly cost to finance $1,000 is $6.00"

I read that to say that the monthly rate of interest is .006
after downpayment you are left with 315000 to mortgage
let the payment be P

315000 = P(1 - 1.006^-360)/.006
I get P = $2138.18