# Support you purchase a home for $350,000. After making a down payment of$50,000 you borrow the...

## Question:

Support you purchase a home for $350,000. After making a down payment of$50,000 you borrow the balance through a mortgage loan at 8% for 20 years.

What is the annual payment required by the mortgage?

## Mortgage Payment:

A mortgage is a means for financing an investor wanting to purchase a house or a building. The terms of the mortgage which include the amount, interest rate and term of the mortgage are agreed upon at the time of issuance and based on this the periodic payments can be calculated.

• {eq}Loan = Payment * \dfrac{( 1 - (1+ r ) ^{-n}}{ r} {/eq}

Price = $350,000 Down payment =$50,000

Loan = 350,000 - 50,000 = $300,000 What is the annual payment required by the mortgage? • {eq}300,000 = Payment * \dfrac{( 1 - (1+ 0.08) ^{-20}}{ 0.08} {/eq} • {eq}300,000 = Payment * 9.81814741 {/eq} • {eq}Payment =\dfrac{300,000}{9.81814741} {/eq} • {eq}Payment =$30,555.66 {/eq}