Purchase a home for $160,000. I intend to put down 20% and finance the remainder over 15 years at 6 3/8% interest. If my taxes & insurance totals $3,600 per year, how much will my total monthly payment be?
I will calculate the mortgage payment first, since I don't know how your jurisdiction handles taxes and insurance.
20% down leaves you with 80% of 160 000 or $128 000
i = .06375/12 = .0053125
n = 15*12 = 180
128 000 = paym[ 1 + 1.0053125^-180]/.0053125
payment = $1106.24
monthly taxes (if no interest is involved by simply dividing it by 12) = 3600/12 = 300
so your monthly payment would be sum of those two
or $1406.24
Mortgage lenders base the mortgage interest rate they offer you on your credit rating. This makes it financially critical to maintain a credit score of 700 or higher. How much more interest would you pay on a $195,000 home if you put 20% down and financed the remaining with a 30-year mortgage at 6% interest compared to a 30-year mortgage at interest?
To calculate your total monthly payment, you need to consider the amount financed, the interest rate, and the term of the loan. Let's break it down step by step:
1. Calculate the down payment:
You intend to put down 20% of the purchase price, so 20% of $160,000 is 0.2 * $160,000 = $32,000.
2. Calculate the loan amount:
The amount financed is the purchase price minus the down payment. Therefore, the loan amount will be $160,000 - $32,000 = $128,000.
3. Calculate the monthly interest rate:
The annual interest rate is 6 3/8%, which can be converted to a decimal by dividing 6.375 by 100 = 0.06375. To find the monthly interest rate, divide this annual rate by 12 = 0.06375 / 12 = 0.0053125.
4. Calculate the number of monthly payments:
The loan term is 15 years, which means there are 15 * 12 = 180 monthly payments.
5. Use the loan amortization formula:
To calculate the total monthly payment, you can use the loan amortization formula:
M = P * (r(1 + r)^n) / ((1 + r)^n - 1),
where M represents the monthly payment, P is the loan amount, r is the monthly interest rate, and n is the number of monthly payments.
Putting the values into the formula:
M = $128,000 * (0.0053125 * (1 + 0.0053125)^180) / ((1 + 0.0053125)^180 - 1).
Calculating this, the total monthly payment (including principal and interest) will be approximately $1,081.55.
6. Calculate the monthly escrow contribution:
The annual taxes and insurance total $3,600. To find the monthly contribution, divide $3,600 by 12 = $300 per month.
7. Calculate the final total monthly payment:
Add the monthly escrow contribution to the total monthly payment calculated in step 5:
$1,081.55 + $300 = $1,381.55.
Therefore, your total monthly payment, including principal, interest, taxes, and insurance, will be approximately $1,381.55.