You are considering purchasing a new home. You will need to borrow $290,000 to purchase the home. A mortgage company offers you a 20-year fixed rate mortgage (240 months)at (1% month). If you borrow the money from this mortgage company, your monthly mortgage payment will be closest to ________.

Question

You are considering purchasing a new home. You will need to borrow $290,000 to purchase the home. A mortgage company offers you a 20-year fixed rate mortgage (240 months)at  (1% month). If you borrow the money from this mortgage company, your monthly mortgage payment will be closest to ________.

Quizplus · Accepted Answer

The fixed monthly payment for the mortgage can be calculated using the formula:
P = (r*PV)/(1 - (1+r)^(-n))
where P is the monthly payment, r is the monthly interest rate, PV is the present value or the loan amount, and n is the total number of payments.
Substituting the given values:
P = (0.01*290000)/(1 - (1+0.01)^(-240))
P = $3193 (rounded to the nearest dollar)
Therefore, the closest monthly mortgage payment is $3193, which is option C.

You Are Considering Purchasing a New Home