Marisa wants to buy a home in Atlanta with a 30-year mortgage that has an annual interest rate of 4.9%. The house she wants is $250,000 and she will make a $55,000 down payment and borrow the remainder. What is Marisa’s monthly mortgage payment to the nearest dollar?

Marisa’s monthly mortgage payment is $1036

Step-by-step explanation:

The cost of the house is $250,000.

The down payment made is $55,000. The balance to be paid would be

250,000 - 55,000 = $195000

We would apply the periodic interest rate formula which is expressed as

P = a/[{(1+r)^n]-1}/{r(1+r)^n}]

Where

P represents the monthly payments.

a represents the amount of the loan

r represents the annual rate.

n represents number of monthly payments. Therefore

a = $195000

r = 0.049/12 = 0.00408

n = 12 × 30 = 360

Therefore,

P = 195000/[{(1+0.00408)^360]-1}/{0.00408(1+0.00408)^360}]

195000/[{(1.00408)^360]-1}/{0.00408(1.00408)^360}]

P = 195000/{4.33 -1}/[0.00408(4.33)]

P = 195000/(3.33/0.0177)

P = 195000/188.14

P = $1036

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