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Homework answers / question archive / You can afford monthly payments of $1,900

You can afford monthly payments of $1,900

Finance

You can afford monthly payments of $1,900. Current mortgage rates are 3.09% for a 30-year fixed rate loan. You are required to make a 20% down payment and have the cash to do it. What price home can you afford?

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We can calculate the price of the home by using the following formula in excel:-

=-pv(rate,nper,pmt,fv)

Here,

PV = Price of the home

Rate =3.09%/12 = 0.2575% (monthly)

Nper = 30*12 = 360 periods (monthly)

Pmt = $1,900

FV = 0

Substituting the values in formula:

= -pv(0.2575%,360,1900,0)

= $445,514.26

Price of the home = $445,514.26 / (1 - 20%)

= $556,892.82

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