Aya and Harumi would like to buy a house..
Aya and Harumi would like to buy a house and their dream house costs $500,000. They have $50,000 saved up for a down payment but would still need to take out a mortgage loan for the remaining $450,000 and they’re not sure whether they could afford the monthly loan payments. The bank has offered them an interest rate of 4.25%, compounded monthly.
How much would they have to be able to afford to pay each month in order to pay off their mortgage in 25 years? [1]
What is the total amount that would be paid to the lender after 25 years of payments?
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