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Nebula 09:52 AM 11-17-2013
OK... So I have a math problem I have been struggling with for literally 4 days. Maybe SOMEONE can help!!!
The price of a home is $80,000. The bank requires a 10% down payment. The cost of the home is financed with a 15 year fixed-rate mortgage at 4%. Find the monthly payment.
I know the down payment is $8,000, which leaves $72,000 to be mortgaged/financed. 4 % interest becomes .04.
It is a monthly payment over 15 years, so that means there is a total of 180 payments (12 x 15)
Problem is, in working everything out, I get $416 as the monthly payment, the answer though is $532.58 (it is in the back of the book, I just have to "show my work for credit" .
Can anyone help me??
Thank you so much!!!!
Mel
The price of a home is $80,000. The bank requires a 10% down payment. The cost of the home is financed with a 15 year fixed-rate mortgage at 4%. Find the monthly payment.
I know the down payment is $8,000, which leaves $72,000 to be mortgaged/financed. 4 % interest becomes .04.
It is a monthly payment over 15 years, so that means there is a total of 180 payments (12 x 15)
Problem is, in working everything out, I get $416 as the monthly payment, the answer though is $532.58 (it is in the back of the book, I just have to "show my work for credit" .
Can anyone help me??
Thank you so much!!!!
Mel
VTMom 10:11 AM 11-17-2013
I just googled "how to calculate mortgage payments" and wikihow had the equation with an example. It's more complicated than rate X principal.
http://www.wikihow.com/Calculate-Mortgage-Payments
http://www.wikihow.com/Calculate-Mortgage-Payments
spinnymarie 05:06 PM 11-17-2013
Yeah I think it has to do with compounded interest. But I have no help aside from that!
Angelsj 05:18 PM 11-17-2013
I keep getting closer to $519 so I am not sure how they get that answer.
Lucy 05:31 PM 11-17-2013
Google "mortgage calculator". Almost every realty website has one. Some require more info to be input than others, so just search till you get one that fits your situation.
Here's one: http://www.mortgagecalculator.org/ It comes up with $532 for the numbers you mentioned.
ETA: I guess I should have read your ENTIRE post!! I thought you were just trying to get a monthly payment amount for a house you were looking at buying! I didn't realize this was for a class. LOL.... silly me.
I have no idea how to figure it. Sorry.
Here's one: http://www.mortgagecalculator.org/ It comes up with $532 for the numbers you mentioned.
ETA: I guess I should have read your ENTIRE post!! I thought you were just trying to get a monthly payment amount for a house you were looking at buying! I didn't realize this was for a class. LOL.... silly me.
I have no idea how to figure it. Sorry.
crunchymama 07:53 PM 11-17-2013
This website may help http://www.wikihow.com/Calculate-Mortgage-Payments
M is your monthly payment
P is your principal 72,000
i is your monthly interest which is 0.04/12 or to simplify 0.0033333333333333
n is number of payments so 180
Solve for M
M = P[i(1+i)^n]/[(1+i)^n -1]
M = 72,000[0.003333333333(1+0.003333333333)^180]/[(1+0.0033333333)^180 -1]
M = 72,000[0.0033333333(1.003333333333)^180]/[(1.003333333333)^180 -1]
M = 72,000[0.00333333333333(1.82030162737)]/[(1.82030162737) -1]
M = 72,000[0.00606767209/0.82030162737]
M = 72,000[0.007396879254590]
M = 532.575063 or $532.58
M is your monthly payment
P is your principal 72,000
i is your monthly interest which is 0.04/12 or to simplify 0.0033333333333333
n is number of payments so 180
Solve for M
M = P[i(1+i)^n]/[(1+i)^n -1]
M = 72,000[0.003333333333(1+0.003333333333)^180]/[(1+0.0033333333)^180 -1]
M = 72,000[0.0033333333(1.003333333333)^180]/[(1.003333333333)^180 -1]
M = 72,000[0.00333333333333(1.82030162737)]/[(1.82030162737) -1]
M = 72,000[0.00606767209/0.82030162737]
M = 72,000[0.007396879254590]
M = 532.575063 or $532.58
Sunshine74 10:12 PM 11-17-2013
Sorry, no advice, I wouldn't even know how to begin that problem. Math is most definitely not my strong suit. But I just wanted to give you my support. You can do it! 
Angelsj 04:39 AM 11-18-2013
Originally Posted by crunchymama:
This website may help http://www.wikihow.com/Calculate-Mortgage-Payments
M is your monthly payment
P is your principal 72,000
i is your monthly interest which is 0.04/12 or to simplify 0.0033333333333333
n is number of payments so 180
Solve for M
M = P[i(1+i)^n]/[(1+i)^n -1]
M = 72,000[0.003333333333(1+0.003333333333)^180]/[(1+0.0033333333)^180 -1]
M = 72,000[0.0033333333(1.003333333333)^180]/[(1.003333333333)^180 -1]
M = 72,000[0.00333333333333(1.82030162737)]/[(1.82030162737) -1]
M = 72,000[0.00606767209/0.82030162737]
M = 72,000[0.007396879254590]
M = 532.575063 or $532.58
Wow, keep ALL the decimal places...lol This website may help http://www.wikihow.com/Calculate-Mortgage-Payments
M is your monthly payment
P is your principal 72,000
i is your monthly interest which is 0.04/12 or to simplify 0.0033333333333333
n is number of payments so 180
Solve for M
M = P[i(1+i)^n]/[(1+i)^n -1]
M = 72,000[0.003333333333(1+0.003333333333)^180]/[(1+0.0033333333)^180 -1]
M = 72,000[0.0033333333(1.003333333333)^180]/[(1.003333333333)^180 -1]
M = 72,000[0.00333333333333(1.82030162737)]/[(1.82030162737) -1]
M = 72,000[0.00606767209/0.82030162737]
M = 72,000[0.007396879254590]
M = 532.575063 or $532.58
Must make a difference, because cutting any of that off early gets you a much lower number.