Problem. Suppose you want to purchase a home for $440,000 with a 30-year mortgage at 4.24% interest. Suppose also that you can put down 25%. Find(a) What are the monthly payments?(b) What is the total amount paid for principal and interest?(c) What is the amount saved if this home is financed for 15 years instead of for 30 years?

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Asked Jan 10, 2020
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Problem. Suppose you want to purchase a home for $440,000 with a 30-year mortgage at 4.24% interest. Suppose also that you can put down 25%. Find

(a) What are the monthly payments?

(b) What is the total amount paid for principal and interest?

(c) What is the amount saved if this home is financed for 15 years instead of for 30 years?

 

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Expert Answer

Step 1

Value of home is $440,000, down payment is of amount $110,000 (25%*$440,000). Actual loan amount is $330,000 ($440,000 - $110,000).

a) Monthly payment on the loan can be calculated using monthly interest rate (r ) as 4.24%/12 = 0.3533333% and number of periods ( n ) as 12*30 = 360 in the below formula:

Finance homework question answer, step 1, image 1
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Step 2

Answer: Monthly payment on a loan of $330,000 is $1,621.47.

Step 3

Total amount paid is the number of payments...

Finance homework question answer, step 3, image 1
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