Mark and Natalie want to buy a house selling for $120,000. They will put $20,000 down as a down payment and finance $100,000.
A) If the bank offers a 30 year mortage at 5.4% annual interest compounded monthly, what will their monthly payment be?
B) How much of the first monthly payment will go towards paying down the loan?
C) Approximately how much interest will they pay if they make all the loan payments on time?
Loan amount = 100,000. Interest rate = 5.4%/12 = 0.45% per month. Time = 30*12 = 360 payments
A) Monthly payment = 100,000(A/P, 0.45%, 360) = 100,000*0.0056153 = $561.53
B) Interest payment in first monthly payment is 0.45%*100000 = 450 so (561.53 - 450) = 111.53 of the first monthly payment will go towards paying down the loan
C) Total interest paid = 561.53*360 - 100000 = $102,150.80
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