Question

The price of a home is $185,000. A down payment of 10% is required with 2 points at the time of closing. The home is financed over a 25 year period with a fixed rate of 4.5%. Find the monthly payment and total interest paid?

Answer 1

% Financed = 100%-10% = 90%.

Po = 0.9 * 185000=$166500=Amt. Financed

P = Po(1+r)^n.

r = (4.5%/12)/100% = 0.00375 = Monthly %
rate expressed as a decimal.

n = 12Comp./yr * 25Yrs = 300 Compounding
periods.

Plug the above values into the given Eq and get:

P = $511,778.13.

I = P-Po