Question

If the purchase price for a house is $445,500, what is the monthly payment if you put 5% down for a 30 year loan with a fixed rate of 6.25%?
a.
$2,740.19
b.
$2,605.87
c.
$1,314.84
d.
$1,249.10

Answer 1

Loan = 445,500*(1 − 0.05) = 423,225.
Monthly rate r = 0.0625/12 = 0.0052083333, n = 360.
Monthly payment M = P * r / (1 − (1+r)^−n)
= 423,225 * 0.0052083333 / (1 − (1.0052083333)^−360) ≈ $2,605.87.

Answer: b.