Claire is going to get a 25 year mortgage at a 4.5% APR with monthly payments.Claire estimates she can make a $1,750 monthly mortgage payment.How much mortgage will Claire qualify for?
A)$345,382.03
B)$276,614.51
C)$314,843.06
D)$287.451.04

Question

Quizplus · Accepted Answer

To calculate the mortgage amount Claire can qualify for, we need to use the formula for monthly mortgage payments which is:

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

where M is the monthly payment, P is the principal (mortgage amount), i is the monthly interest rate (APR/12), and n is the number of monthly payments (25 years x 12 months = 300).

Plugging in the given values, we get:

1750 = P [ 0.00375(1 + 0.00375)^300 ] / [ (1 + 0.00375)^300 – 1]

Solving for P, we get:

P = $314,843.06

Therefore, the best choice is (C) $314,843.06.

Claire Is Going to Get a 25 Year Mortgage at a 4.5