a) A house is selling for $300,000. You have $20,000 to put down, and the rest you will be financing on a 30 year loan at 6.25%. What is your monthly payment, rounded to the nearest penny?

b) A house is selling for $300,000. You have $20,000 to put down, and the rest you will be financing on a 15 year loan at 6.25%. What is your monthly payment, rounded to the nearest penny?

c) You have $30,000 to put down and you can afford payments of $1500 a month for mortgage. How expensive a house can you afford to buy on 30 year loan at 6.25% interest?

d) You have $30,000 to put down and you can afford payments of $1500 a month for mortgage. How expensive a house can you afford to buy on 15 year loan at 6.25% interest?

Answers in the comments.

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## 2 comments:

a) A house is selling for $300,000. You have $20,000 to put down, and the rest you will be financing on a 30 year loan at 6.25%. What is your monthly payment, rounded to the nearest penny?

You are financing $280,000, so the total will be 280,000*(1+30*.0625) = $805,000.

$805,000/(12*30) = $2236.11, rounded to the nearest penny.

b) A house is selling for $300,000. You have $20,000 to put down, and the rest you will be financing on a 15 year loan at 6.25%. What is your monthly payment, rounded to the nearest penny?

You are financing $280,000, so the total will be 280,000*(1+15*.0625) = $542,500.

$542,500/(12*15) = $3013.89, rounded to the nearest penny.

c) You have $30,000 to put down and you can afford payments of $1500 a month for mortgage. How expensive a house can you afford to buy on 30 year loan at 6.25% interest?

You will pay 1500*12*30 = $540,000 over the 30 year loan.

540000/(1+30*.0625) = $187,826.09 rounded to the nearest penny.

Add the $30,000 down and you can afford a house selling for $217,826.09.

d) You have $30,000 to put down and you can afford payments of $1500 a month for mortgage. How expensive a house can you afford to buy on 30 year loan at 6.25% interest?

You will pay 1500*12*15 = $270,000 over the 15 year loan.

270000/(1+15*.0625) = $139,354.84 rounded to the nearest penny.

Add the $30,000 down and you can afford a house selling for $169,354.84.

Problem d) says "30 year loan" instead of "15 year loan". The answer is correct for the 15 year loan.

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