You want to buy a house that costs $200,000. You will make a down payment equal to 10 percent of the price of the house and finance the remainder with a loan that has an APR of 5.15 percent compounded monthly. If the loan is for 20 years, what are your monthly mortgage payments

The correct answer is $1202.37.

Explanation:

According to the scenario, the given data are as follows:

Cost of house = $200,000

Down payment = $200,000 * 10% = $20,000

Loan amount (p) = $200,000 - $20,000 = $180,000

Interest rate (r) = 5.15%

Loan period = 20 years

Loan period (monthly) (t) = 240 months

So, we can calculate the monthly payment by using following formula:

Monthly payment = p * r * (1 + r) ^t : ((1 + r) ^t - 1)

= $180,000 * 0.0515:12 * (1 + 0.0515:12) ^240 : ((1 + 0.0515:12) ^240-1)

= 772.5 (2.79378638786) : (1.00429) ^240 - 1)

= 2156.803 : (1.79378638786)

= $1202.37