A buyer borrows $150,000 on a 15-year fixed-rate mortgage at 6% interest. Using the standard amortization formula and rounding to the nearest dollar, what is the monthly principal-and-interest payment?
Correct Answer
A) $1,266
Using the standard amortization formula with principal of $150,000, monthly rate of 6% ÷ 12, and 180 monthly payments gives a payment of about $1,265.79. Rounded to the nearest whole dollar, the monthly principal-and-interest payment is $1,266.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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