Question

You plan to purchase a new home in the amount of $165,500. you are required to make a 20% down payment in cash. the bank agrees to give you a 30-year, fixed interest rate of 4.6% for the amount of the mortgage loan. identify the amount you must borrow from the bank.

Answer 1

Answer:

  $132,400

Step-by-step explanation:

You want to find the principal amount of a loan needed to pay for a home costing $165,500 after a 20% down payment has been made.

Loan amount

The loan amount will be for the remaining 80% of the price of the home:

  0.80 × $165,500 = $132,400

The amount to be borrowed is $132,400.

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Additional comment

In these simplistic problems, the other costs of the transaction are usually ignored. Home loans often include fees for loan origination, taxes, agent commissions, and points for rate reduction, among others. The borrower may elect to finance some or all of these extra fees, adding to the loan value.

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