Mr and Mrs

Finance Dec 25, 2020

Mr and Mrs. white applied to their credit union for a first mortgage of $190 000 to buy a house. The mortgage is to be amortized over 25 years and interest on the mortgage is 4.9% compounded semi-annually. What is the size of the monthly payment if payments are made at the end of each month?

Expert Solution

ANSWER

Cost - 190,000

time - 25 x 2 = 50

mortgage rate (r) = 4.9%/2 = 2.45%

Monthly payments = p x r x (1+r)ⁿ / (1+r)ⁿ -1

= 190,000 x 2.45% x (1+0.0245)⁵⁰ / (1+0.0245)⁵⁰ - 1

= 6,632

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