You wish to buy a house for $350,000 Bank of Saratoga offers you a 30-year loan with
Question:
You wish to buy a house for $350,000 Bank of Saratoga offers you a 30-year loan with equal monthly payments at 6.3% per annum provided you put a 10% as down payment at the time of closing. What would be your monthly periodic annuity payments (principal + interest) to the nearest $? Hint: Calculate the monthly mortgage payment (annuity payment) using the loan payment formula:
PMT = (PVA * i/n) / [1-(1+i/n)-nt]
Where:
PMT = monthly mortgage (annuity) payment
PVA = present value of annuity (loan amount = purchase price - down payment)
I = monthly interest rate (annual APR divided by 12)
N = total number of payments per years
T = total number of payments (loan term in years * 12)
You are given the following information:
Purchase price = $350,000
Down payment = 10% of $350,000 = $35,000
Loan payment (PVA) = $350,000 - $35,000 = $315,000
Annual interest rate = 6.3%
Loan term (t) = 30 years
Monthly interest rate (i) = 6.3% / 12 / 100 = 0.00525
Required to calculate monthly mortgage payments.
Personal Financial Planning
ISBN: 978-1305636613
14th edition
Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk