Question

A home mortgage with monthly payments for 30 years is available at 6% interest. The home you are buying costs $120,000, and you have saved $12,000 to meet the requirement for a 10% down payment. The lender charges "points" of 2% of the loan value as a loan origination and processing fee. This fee is added to the initial balance of the loan. What is your monthly payment?

Answer 1

Answer: $858.67 Monthly Repayment

Explanation:

Total Loan = $120,000

Less Initial deposit of $12,000

Balance loan= $108,000

Add 2% originating & Processing fee = $120,000 * 2% = $2,400

Total Loan = $108,000+$2,400 = $110,400

Int accrued for 30 years on $110,400 * 6% = $6,624 * 30=$198,720

Total loan plus Int = $110,400+$198,720= $309,120/360(30*12) = 858.6666

Monthly payment = $858.67