You have decided to purchase a new home valued at $300,000.You have a 20% down payment the bank has offered to finance a mortgage at a rate of 3.25% over 30 years.What would be your biweekly payments?

Question

Quizplus · Accepted Answer

First, we need to calculate the mortgage amount:

$300,000 x 0.20 = $60,000 (down payment) 
$300,000 - $60,000 = $240,000 (mortgage amount)

Next, we need to calculate the biweekly mortgage payments:

n = 30 years x 26 (number of biweekly payments in a year) = 780 payments

i = 3.25% / 26 (biweekly period) = 0.125%

Using the mortgage formula:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]

M = $240,000 [ 0.00125(1 + 0.00125)^780 ] / [ (1 + 0.00125)^780 – 1]

M = $240,000 [ 0.00125(1.00125)^780 ] / [ (1.00125)^780 – 1]

M = $482 (rounded to the nearest dollar)

Therefore, the biweekly mortgage payments are $482, so the answer is C.

You Have Decided to Purchase a New Home Valued at $300,000.You