Calculating Monthly Mortgage Payment for a Home Loan

What is the monthly payment for a $513,000 home bought with a 20% down payment?

A) $2,418.76

B) $2,522.94

C) $2,635.20

D) $2,743.88

Monthly Payment Calculation:

The monthly payment for the $513,000 home with a 20% down payment and a balance financed for 30 years at 6.6% interest is $2,522.94.

When purchasing a home, it's important to understand the financial commitment involved. In this scenario, with a down payment of 20% of the home's price, the loan amount becomes $410,400. The interest rate is 6.6%, and the loan term is 30 years (or 360 months).

To calculate the monthly payment, we use the formula: $PMT = rPV / (1 - (1 + r)^-n), where r is the monthly interest rate, PV is the loan amount, and n is the total number of monthly payments.

Given that r = 0.066/12 = 0.0055, PV = $410,400, and n = 360, we substitute these values into the formula and calculate the monthly payment to be $2,522.94. This aligns with the correct option B.

Understanding the monthly mortgage payment helps to budget effectively and plan for the future financial obligations associated with homeownership. It's essential to consider all aspects of the loan terms before committing to a mortgage.