Adrian is a single man and wants to save up enough money to put as a down payment on a new house in 5 years. He has read that the best way to purchase a house is with a 20% down payment. He has a large income and very little debt right now so he can afford to save a substantial amount of money every month. He is asking you for some advice to help him reach his goal.
-It is now 5 years later and Adrian has saved up enough money to make a 20% downpayment on a new house. He will have to borrow $135,000 at an annual rate 6% for 30 years, compounded monthly. What will his monthly mortgage payment be?

Question

Quizplus · Accepted Answer

To find Adrian's monthly mortgage payment, we need to use the formula:

Mortgage Payment = P * r * (1+r)^n / ((1+r)^n - 1)

where:
P = principal amount borrowed = $135,000
r = monthly interest rate = annual rate / 12 = 6% / 12 = 0.005
n = total number of monthly payments = 30 years * 12 months/year = 360

Plugging in the values, we get:

Mortgage Payment = 135000 * 0.005 * (1+0.005)^360 / ((1+0.005)^360 - 1) = $809.39

Therefore, option B is the correct answer.

Adrian Is a Single Man and Wants to Save Up