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Consider purchasing a home with a selling price equal to $500,000. You make a 20% down payment in cash and take out a 25-year, fixed-rate mortgage for the remaining $400,000 at an annual percentage rate of 2%. The remaining loan balance is amortized into yearly payments. How much do you need to pay each year

Answer :

He needs to pay $96,000 each year.

What is the selling price?

  • The selling price of a good or service is the final cost to the seller, or what the buyer actually pays.
  • A commodity or service in a specific amount, weight, or measurement can be exchanged.
  • It is one of the most crucial things for a business to decide.
  • It is significant since it determines whether or not it will survive.
  • Sales of a product are directly impacted by its price.

What is a mortgage?

  • A mortgage is a contract between you and a lender that gives the lender the right to repossess your property if you don't pay back the loaned funds for the purchase or refinance of a home.

Solution -

To find how much he needs to pay each year:

2% of 400,000 = $8,000 (per month)

Per year = 12 × 8000 = $96,000

Therefore, he needs to pay $96,000 each year.

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