Tia just purchased a house for 150,000. The 20-year mortgage has a 15% down payment, an interest rate of 3.75%. The yearly taxes are $1200. What are her monthly payments? HEL

9514 1404 393

  $855.93

Step-by-step explanation:

The amount borrowed will be ...

  $150,000 - 0.15×150,000 = 0.85×150,000 = $127,500

The amortization formula is used to find the monthly loan payment:

  A = P(r/12)/(1 -(1 +r/12)^(-12t))

where P is the principal borrowed, r is the annual interest rate, and t is the number of years. For the given values, we find the monthly loan payment to be ...

  A = $127,500(0.0375/12)/(1 -(1 +0.0375/12)^(-12·20))

  A = $755.93

The taxes are often paid as part of the monthly payment. The tax amount added to the loan payment will be ...

  $1200/(12 months) = $100/month

So, the total monthly mortgage payment is ...

  $755.93 +100.00 = $855.93