The price of a home is 177,000. The bank requires a 20% down payment and three points at the time of closing. The cost of the home is financed with a 30-year fixed-rate mortgage at
10%.
What is your question?
What does "and three points at the time of closing" mean?
To calculate the down payment, we first need to determine 20% of the home price.
Step 1: Calculate the down payment amount:
Down Payment = 20% of the home price
Down Payment = 20/100 * $177,000
Down Payment = $35,400
Next, we need to calculate the cost of three points at the time of closing.
Step 2: Calculate the cost of three points:
Cost of Points = 3% of the home price
Cost of Points = 3/100 * $177,000
Cost of Points = $5,310
Now, let's calculate the loan amount by subtracting the down payment and the cost of points from the home price.
Step 3: Calculate the loan amount:
Loan Amount = Home Price - Down Payment - Cost of Points
Loan Amount = $177,000 - $35,400 - $5,310
Loan Amount = $136,290
Next, we can calculate the monthly mortgage payment using the loan amount and the interest rate.
Step 4: Calculate the monthly mortgage payment:
Monthly Mortgage Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate) ^ (-Number of Months))
Monthly Interest Rate = (Annual Interest Rate / 100) / 12
Number of Months = Loan Term * 12
Monthly Interest Rate = (10 / 100) / 12 = 0.008333 (approx.)
Number of Months = 30 * 12 = 360
Now, let's calculate the monthly mortgage payment using the formula:
Monthly Mortgage Payment = ($136,290 * 0.008333) / (1 - (1 + 0.008333) ^ (-360))
Monthly Mortgage Payment = $1,190.97 (approx.)
Therefore, the monthly mortgage payment for the financed amount of $136,290 over 30 years at 10% interest rate would be approximately $1,190.97.