Paytons' 15-Year 9% FRM Mortgage Payment Calculation

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In summary, Rebecca and Tom Payton are buying a home for $200,000 and can put down 20% of the price. They have applied for a 15-year, 9% fixed rate mortgage with a combined gross annual income of $70,000. If they make all payments on time, they will pay a total of $69,600 to satisfy their mortgage loan. The present value of the loan can be calculated using the formula PV = R(1-(1+i)^-n)/i, assuming monthly payments of 180 and an interest rate of .0075, resulting in a payment amount of $69,600.
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Homework Statement



Rebecca and Tom Payton have decided to buy a home that costs $200,000. The Paytons can put down 20% of the home's price. They have applied for a 15-year, 9% FRM to finance the balance. They Paytons have a combined gross annual income of $70,000.

How much will the Paytons pay to satisfy their mortgage loan, if they make all the payments on time for the amount being financed?

The Attempt at a Solution


I don't know where to start.
I got 200,000(.20) = 40000
Then I don't know where to go after that.
 
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What does FRM stand for?
 
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FRM in this context stands for "Fixed Rate Mortgage" (so the rate doesn't change over the life of the loan).
 
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Wouldn't the Present Value of an Annuity formula work for this problem?
[tex]PV = R\frac{1 - (1 + i)^{-n}}{i}[/tex]

PV = the amount of the loan.
R = the amount of a payment.
i = the interest rate per period.
n = the number of equal payments.

The OP didn't state how often the payments need to be made. I'll assume monthly. Plug in 160,000 for PV (200,000 minus 20% down), .0075 for i (interest rate .09 divided by 12 months in a year), and 180 for n (15 years times 12 monthly payments in a year), and solve for R.


69
 

1. How do I calculate my monthly mortgage payment using Paytons' 15-Year 9% FRM?

To calculate your monthly mortgage payment using Paytons' 15-Year 9% FRM, you will need to know the following information: the loan amount, the interest rate, and the loan term. Once you have this information, you can use a mortgage calculator or manually calculate the payment using the formula P = L[c(1+c)^n]/[(1+c)^n-1], where P is the monthly payment, L is the loan amount, c is the monthly interest rate (9% divided by 12), and n is the total number of monthly payments (15 years multiplied by 12 months).

2. What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?

A fixed-rate mortgage (FRM) has a fixed interest rate for the entire term of the loan, meaning your monthly payments will remain the same. An adjustable-rate mortgage (ARM) has an interest rate that can change periodically, typically after an initial fixed-rate period. This means your monthly payments may increase or decrease depending on the current interest rate.

3. Can I change the interest rate on my Paytons' 15-Year 9% FRM?

No, the interest rate on a fixed-rate mortgage cannot be changed once the loan is finalized. This is one of the key differences between a fixed-rate mortgage and an adjustable-rate mortgage.

4. What factors can affect my monthly mortgage payment?

The main factors that can affect your monthly mortgage payment include the loan amount, interest rate, loan term, and property taxes. Your credit score, down payment amount, and type of mortgage can also have an impact on your monthly payment.

5. Is Paytons' 15-Year 9% FRM a good mortgage option for me?

It depends on your individual financial situation and goals. A 15-year fixed-rate mortgage may be a good option if you can afford higher monthly payments and want to pay off your loan faster. However, it's important to compare different mortgage options and speak with a financial advisor to determine the best choice for you.

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