You want to buy a $195,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan for the rest.
What will your monthly payments be if the interest rate is 7%
To calculate the monthly payments, we need to determine the loan amount after the down payment and then calculate the monthly mortgage payments.
The down payment amount is 20% of $195,000, which is:
0.20 * $195,000 = $39,000
Thus, the loan amount will be the remaining $195,000 - $39,000 = $156,000.
Next, we can use the formula for calculating the monthly mortgage payments:
M = P * (r * (1 + r)^n) / ((1 + r)^n - 1),
where:
M represents the monthly payment,
P represents the loan amount,
r represents the monthly interest rate, and
n represents the number of payments (in this case, 30 years = 360 months).
The monthly interest rate is the annual interest rate divided by 12 months, so:
7% / 100 / 12 = 0.00583333
Plugging in these values into the formula, we get:
M = $156,000 * (0.00583333 * (1 + 0.00583333)^360) / ((1 + 0.00583333)^360 - 1)
Calculating this equation, we find that the monthly mortgage payment will be approximately $1,037.96.