Copyright

A young engineer wishes to buy a house but can afford monthly payments of only $500. Thirty-year...

Question:

A young engineer wishes to buy a house but can afford monthly payments of only $500. Thirty-year loans are available at 6% interest compounded monthly. If she can make a $50000 down payment, what is the price of the most expensive house that she can afford to purchase?

Mortgage Loan

The affordability of a mortgage loan is dependent upon the amount of the mortgage, the interest rate charged, the number of years, and the monthly payment.

Answer and Explanation:

The answer is $133,396

The formula is:

{eq}PV=PMT/(i/(1-((1+i)^{-n}))) {/eq} where PMT equals the $500, i equals the interest rate (6%), and n...

See full answer below.

Become a Study.com member to unlock this answer! Create your account

View this answer

Learn more about this topic:

Loading...
Buying a House: Mortgage Types & Loan Length

from Finance 102: Personal Finance

Chapter 7 / Lesson 4
8.1K

Related to this Question

Explore our homework questions and answers library