Question

Ron is ready to purchase a house that costs $300,000. He wants the minimum down payment (DO) to avoid PMI. He qualifies for a 15-year fixed-rate loan at 4.5%, what is the total finance charges

Answer 1

Answer:

Interest expense over the life ofthe mortgage $ 90.476,4‬

Explanation:

To avoid the mortgage insurance it is required 20% of the mortgage

that is 300,000 x 20% = 60,000

Then, 300,000 - 60,000 = 240,000

We calculate the quota for this and soolve for the interest:

$PV \div \frac{1-(1+r)^{-time} }{rate} = C$

PV 240,000.00

time 180

rate 0.00375

$240000 \div \frac{1-(1+0.00375)^{-180} }{0.00375} = C$

C  $ 1,835.984

we multiply this by 180 and subtract the principal to get the total interest

1,835.98 x 180 - 240,000 = 90.476,4‬