A home buyer buys a house for $225,000.She pays 20% cash,and takes a fixed-rate mortgage for ten years at a quoted APR of 6.26%.If she makes biweekly payments,which of the following is closest to each of her payments?

Question

Quizplus · Accepted Answer

The buyer pays 20% of $225,000 as a down payment, which is $45,000. The mortgage amount is $225,000 - $45,000 = $180,000. With a biweekly payment schedule, there are 26 payments per year. The biweekly interest rate is approximately 0.0626/26. Using the formula for an annuity, the biweekly payment is closest to $928.61.

A Home Buyer Buys a House for $225,000