(a) To calculate the monthly payment, we first need to determine the remaining balance on the mortgage. Since they put $40,000 down, the remaining balance is:
$191,000 - $40,000 = $151,000
Next, we need to use the formula for the monthly payment on a mortgage:
M = P * (r/12) * (1 + r/12)^n / [(1 + r/12)^n - 1]
Where:
M = monthly payment
P = principal (remaining balance)
r = annual interest rate (5.25%)
n = number of payments (15 years * 12 months per year = 180 payments)
Plugging in the values, we get:
M = $151,000 * (0.0525/12) * (1 + 0.0525/12)^180 / [(1 + 0.0525/12)^180 - 1]
M = $1,214.73
Therefore, their monthly payment is $1,214.73.
(b) To calculate the total interest paid over the entire loan, we can use the formula:
Total interest = (monthly payment * number of payments) - principal
Plugging in the values, we get:
Total interest = ($1,214.73 * 180) - $151,000
Total interest = $219,451.40 - $151,000
Total interest = $68,451.40
Therefore, they paid $68,451.40 in interest over the entire loan.
The Fisher family bought a house for $191,000. They paid $40,000 down and took out a 15
year mortgage for the remaining balance at 5.25%, compounded monthly.
(a) What is their monthly payment?
(b) How much interest did they pay over the entire loan?
1 answer
1 answer