Question

Jack and Jill are buying a new $339,999 house. The bank wants 5% down payment and will finance the remainder at 2.75% annual interest for 30 years. About how much is each monthly payment?

$1,318.62
		$1,406.44
		$1,304.04
		$1,495.86

Answer 1

Monthly Loan Payment

Here, we’ve Loan Amount (P) = $322,999 [$3339,999 x 95%]

Monthly Interest Rate (n) = 0.22916667% per month [2.75% / 12 Months]

Number of months (n) = 360 Months [30 Years x 12 Months]

Therefore, the Monthly Loan Payment = [P x {r (1 + r)ⁿ} ] / [(1 + r)ⁿ – 1]

= [$322,999 x {0.0022916667 x (1 + 0.0022916667)³⁶⁰}] / [(1 + 0.0022916667)³⁶⁰ – 1]

= [$322,999 x {0.0022916667 x 2.27972798}] / [2.27972798 – 1]

= [$322,999 x 0.005224377] / 1.27972798

= $1,687.47 / 2.27972798

= $1,318.62

“Hence, the monthly loan payment will be $1,318.62”