Question

Albert Tilman wishes to buy a house selling for $180,000. His credit union requires him to make a 20% downpayment. The current mortgage rate is 11.0% Find the required down payment and the total monthly payment fora 25-year loan

Answer 1

The current mortgage rate is 11%

the total value of mortgage is:

$\begin{gathered} 180000+11\text{ perstnage of 180000} \\ 180000+19800 \\ =199800 \end{gathered}$

Required down payment is 20% then:

20% of 199800

$\begin{gathered} \frac{20}{100}\times199800 \\ =39960 \end{gathered}$

Total monthly payment for 25 year

$\text{monthly payment=}\frac{total\text{ value-required down payment}}{\text{time (in month)}}$

So the value of monthly payment is:

$\begin{gathered} \text{monthly payment}=\frac{199800-39960}{25\times12} \\ =\frac{159840}{300} \\ =532.8 \end{gathered}$

The required down payment is 39960 and monthly payment is 532.8.