A family buys a house and has to pay monthly

  • MHB
  • Thread starter needOfHelpCMath
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In summary, a family has borrowed $40,000 at an annual interest rate of 11% to purchase a home. They will pay back the loan over a 30 year period in equal monthly payments. Using the periodic deposit formula, the correct monthly payment is $380.93, which can be found by converting the interest rate to decimal form and plugging in the values for P, r, m, and t.
  • #1
needOfHelpCMath
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In order to purchase a home, a family borrows \$40,000 at an annual interest rate of 11%, to be paid back over a 30 year period in equal monthly payments. What is their monthly payment?

A) \$366.67 B) \$12.12 C) \$380.93 D) \$392.05

Using the Periodic Deposit for Monthly Amortize Payments formula but can't get the right answer or I am using the wrong equation?
Here is the equation:

R = P(r/m) / [1-(1+r/m)^(-mt)]

R = the periodic deposit for ANNUITY/ Sinking fund/ Amoritization
P = Present Value or Deposit Value
r = interest rate in decimal
m = number of times interest is compounded per year
t = time

when I plug in the numbers my answer is \$130.50
 
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  • #3
hmm...probably missing some parentheses.

- - - Updated - - -

AHHH see my mistake! keep on making 11% in decimal form to .011 silly me (Drunk)(Drunk)(Drunk)
 

FAQ: A family buys a house and has to pay monthly

How much does the monthly payment for a house typically cost?

The monthly payment for a house can vary greatly depending on the location, size, and type of house. However, a general rule of thumb is that the monthly payment should not exceed 28% of the total household income.

What factors can affect the monthly payment for a house?

The monthly payment for a house can be affected by various factors such as the interest rate, down payment amount, loan term, property taxes, and homeowners insurance. These factors can all impact the overall cost of the house and therefore, the monthly payment.

Is it better to buy a house with a fixed or adjustable interest rate?

It ultimately depends on your personal financial situation and risk tolerance. A fixed interest rate means that your monthly payment will remain the same throughout the loan term, providing stability and predictability. On the other hand, an adjustable interest rate can start off lower but can potentially increase over time, leading to higher monthly payments.

Can a family negotiate the monthly payment for a house?

In some cases, a family can negotiate the monthly payment for a house. This could be through negotiating a lower interest rate, reducing the down payment amount, or extending the loan term. However, it ultimately depends on the lender and their willingness to negotiate.

What happens if a family is unable to make their monthly house payment?

If a family is unable to make their monthly house payment, they could potentially face consequences such as late fees, damage to their credit score, and even foreclosure. It is important for families to carefully consider their budget and financial situation before committing to a monthly house payment.

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