The Carman’s have decided they would like to downsize from their current 5 bedro

Question

The Carman’s have decided they would like to downsize from their current 5 bedroom home. They have found a two bedroom condo in Long Beach listing for $300,000. Because of the young population in this area, condo's now require only 10% down for the down payment, which they easily have in their savings account. 12a. Assuming they have the down payment, determine the monthly payment for the mortgage if they get the 4.15% rate on a 30 year mortgage? 12b. How much interest can they declare on their taxes for their first year’s payments to the bank? please answer it with finance calucalter or excel

Explanation / Answer

In order to calculate interest paid on a mortgage loan, we will calculate the monthly payment and then use the simple method from method 1 above to calculate interest. The monthly payment equation can be represented as follows: M=Pr(1+r)n(1+r)n1{displaystyle M=P{rac {r(1+r)^{n}}{(1+r)^{n}-1}}}. These variables represent the following inputs:

Sloution FOR A

M = P [ r(1 + r)^n ] / [ (1 + r)^n – 1]

Now calculate the P which is (300000- 30000*10%)= 270000
                               R=4.15/100=0.0415/12=.0035

Now put all the values in the given formula

M =270000 [ .0035(1 + .0035)^360 ] / [ (1 + .0035)^360– 1]
       = 1312.48

So the Monthly payment for the mortage is 1312.48

Soultion for B

Find monthly interest paid by dividing "P" by "n" and subtracting this number for your monthly payments, "M."

Monthly interest paid=M-( 270000/360)

                                        =1312.48-750
                                       = 562.48
Now multiply the interest (562.48*12) no of years to find to declares the taxes for the first year to bank
=6749.76

M=Pr(1+r)n(1+r)n1

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