What are the monthly payments on a 30-year, $150,000 mortgage if the mortgage rate is 6 percent?

Question:- What are the monthly payments on a 30-year, $150,000 mortgage if the mortgage rate is 6 percent?

Answer: The correct answer is $899.33.

To calculate the monthly payments on a 30-year, $150,000 mortgage with a 6% interest rate, we’ll use the mortgage payment formula:

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

Where:

M = Monthly payment

P = The principal sum/face value of the loan.

r = The Monthly interest rate (annual rate/12)

n = Total no. of months = (30 * 12) = 360

Let’s plug in the values:

P = $150,000

r = 0.06 / 12 = 0.005 (6% annual rate divided by 12 months)

n = 30 * 12 = 360 months

Now, let’s calculate:

M = 150000 * (0. 005 * (1 + 0. 005)^x) / ((1 + 0. 005)^x – 1), where x = 360.

M = 150000 * (0. 005 * 6. 022575)/ (6. 022575-1)

M = 150,000 * 0.030112875 / 5.022575

M = 4,516.93 / 5. 022575

M = 899.33

As a result, depending on its terms, the monthly payment for this sort of mortgage would be $899.33.

This regular, monthly payment is the combination of both the principal and the interest that will be charged on the loan. More of the payment goes to interest especially in the first years of the mortgage while the majority of the payment is directed to the principal as the balance reduces in later years.

Over the life of the loan, the total amount paid would be

$899. 33 * 360 months = $ 323,758.80

This means the total interest paid over 30 years would be: $323,758.80 -$150,000= $173,758.80