You are thinking of purchasing a home. The house costs $300,000. You have $43,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offerring a 30-year mortgage that requires annual payments and has an interest rate of 6% per year. What will be your annual payment if you for this mortgage?

Question

Kristian Dudley

Business

15 April, 23:10

You are thinking of purchasing a home. The house costs $300,000. You have $43,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offerring a 30-year mortgage that requires annual payments and has an interest rate of 6% per year. What will be your annual payment if you for this mortgage?

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Answers (1)

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Alvaro Santiago · Answer 1

Annual payment = $3,250.77

Explanation:

Giving the following information:

You are thinking of purchasing a home. The house costs $300,000. You have $43,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 6% per year.

FV = 300,000 - 43,000 = $257,000

i=6%

n = 30

Annual payment=?

FV = {A*[ (1+i) ^n-1]}/i

A = annual deposit

Isolating A:

A = (FV*i) / {[ (1+i) ^n]-1}

A = (257,000*0.06) / {[1.06^30]-1} = $3,250.77