Compound Interest Home Buying Project

College Prep Math Project Example

College Prep Math Project Example I will do a problem with you for a $320,000 home. 1. What is the asking price for your home?

Asking Price: _____$320,000____(AP) 2. Find the selling price. (SP 95% AP) Selling price: ________________(SP) 3. What down payment does your bank require?

% Down Required: _________________(%D) Find that percentage of the selling price. (DP = 20%D SP) Down Payment: ________________(DP)

4. Find your loan amount. Loan Amount P = SP – DP.

LOAN AMOUNT:___________________ (P)

$304,000

20%

$60,800

$243,200

5. What is the interest rate that your bank is charging for a 30-year fixed rate loan? Interest Rate: ______________________ (r) 6. Determine your monthly loan payment using the following formula: r = annual percentage rate t = length of the loan in yearsP = loan amountM = monthly payment

M=(P(r/n))/(1-(1+r/n)^(-n*t)) Monthly mortgage payment: ___________________(M)

𝑀=𝑃 ( 𝑟𝑛 )

(1−(1+ 𝑟𝑛

)(−𝑛∗𝑡 ))

4.25%

$1,196.40

7. What is the Full Year taxes for the city you bought the house in?

Full Year Taxes = __________(FYT) 8. Determine the monthly taxes.MT = FYT 12. Monthly Taxes: __________________(MT)

9. Determine your monthly house paymentMHP = M + MT Monthly House Payment______________(MHP)

$4,500

$375

$1571.40