Question

The price of a home is $320,000. The bank requires an 8% down payment and three points
at the time of closing. The cost of the home is financed with a 30-year fixed rate at 6%.
Find the amount that must be paid for the three points at closing & Find the monthly payment.

Answer 1

Given:
purchase price = 320,000
down payment = 8%
mortgage bought down (to 6%) with 3 points (3%).
Term, n= 30 years
rate, i=6% per annum = 6%/12 = 0.005
compounding frequency = monthly (ASSUMED).

Solution:
Down payment = 8% * 320,000 = 25,600
Loan, P = 320,000 - 25,600 = 294,400
Cost of 3 points = 3% * 294,400 = 8832 (amount to be paid at closing)

Monthly payment = Pi(1+i)^(12n)/((1+i)^(12n)-1)
=294400*0.005*(1.005^(12*30))/(1.005^(12*30)-1)
=1765.0767
=1765.08 (to the nearest cent).

Answer 2

what problem can solved by using GCF.