Suppose that you want to purchase a home for $450,000 with a 30 year mortgage at 6% interest. Suppose that you can put 40% down. Assume that the monthly cost to finance $1,000 is $6.00. What are the monthly payments?
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Amt. Financed=450000-0.4*450000=$270000.
Cost = 6 * (270000/1000) = $1620/mo.
To calculate the monthly payments on a mortgage, you'll need to consider the loan amount, interest rate, and loan term.
First, let's determine the loan amount after the down payment. You can find this by multiplying the purchase price of the home by the down payment percentage:
Down payment = 40% of $450,000 = $180,000
Loan amount = Purchase price - Down payment = $450,000 - $180,000 = $270,000
Now, let's calculate the monthly interest rate. Divide the annual interest rate by 12 (the number of months in a year):
Monthly interest rate = 6% / 12 = 0.06 / 12 = 0.005
Next, calculate the number of monthly payments by multiplying the loan term (30 years) by 12:
Number of monthly payments = Loan term in years × 12 = 30 × 12 = 360
Now, we can use the formula for monthly mortgage payments:
Monthly payment = Loan amount × (Monthly interest rate / (1 - (1 + Monthly interest rate)^(-Number of monthly payments)))
Plugging in the values:
Monthly payment = $270,000 × (0.005 / (1 - (1 + 0.005)^(-360)))
Using a calculator or spreadsheet software, you can solve this equation to find the monthly payment. The result should be approximately $1,619.89.
Therefore, the monthly mortgage payment for a $450,000 home with a 30-year mortgage at a 6% interest rate (with a 40% down payment) would be approximately $1,619.89.