You want to buy a house in 9 years the estimated cost is 175800.00 you want to make a 20% down payment and the closing costs are 7% how much in totality do you need to save each month to reach your goal if you cover closing costs and the down payment
First, we need to find the total cost of the down payment and closing costs.
20% of the estimated cost of the house = 0.20 x 175800 = 35160
7% of the estimated cost of the house = 0.07 x 175800 = 12306
Total cost of down payment and closing costs = 35160 + 12306 = 47466
To find out how much you need to save each month, we'll use the formula for future value of an annuity:
FV = Pmt x [((1 + r)^n - 1) / r]
Where:
FV = future value (the amount you want to save)
Pmt = monthly payment
r = monthly interest rate
n = number of months
Let's assume a monthly interest rate of 0.5% (which is 6% annually), and a savings period of 9 years or 108 months.
175800 - 35160 (down payment) = 140640 is the total amount that needs to be borrowed
To find the monthly payments, we need to solve for Pmt:
140640 + 47466 = 188106 as the total amount of money needed at the start
r = 0.005 (monthly interest rate)
n = 108 (number of months)
Pmt = [188106 x 0.005] / [(1 + 0.005)^108 - 1] = 1461.57
So, you need to save approximately $1,461.57 each month to reach your goal of buying a house in 9 years, assuming a 20% down payment and 7% closing costs.