Question

Question 11:

Jerry and Elaine finally got married, and have bought a $325,000 house. The interest rate is at 3.90%, paid monthly, and is a 30-year loan. They plan to borrow $300,000 for the purchase and put down $25,000.00. How much principal on the loan will they pay over the 30 years?

Answer 1

The Formula for Loan is given by

Where,

• P₀ is the balance in the account at the beginning (the principal, or amount of the loan).
• d is your loan payment (your monthly payment, annual payment, etc)
• r is the annual interest rate in decimal form.
• k is the number of compounding periods in one year.
• N is the length of the loan, in years.

Given

P₀= $300,000, d=?, r=3.9% =0.039 , k=12, N=30 years.

putting the above values in formula above

so the couple will pay $1415 monthly payment for 30 years or 360 month.

Therefore the couple have to pay a priciple of $1415 * 360 = $509,400 over 30 years. Answer.