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    Mathematics in Finance - Buying and Selling a House

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    The Zambrano family bought a house for $91,000. They paid $20,000 down and took out a 30-year mortgage for the balance at 9%.
    a. Find their monthly payment.
    b. How much of the first payment is interest?

    After 180 payments, the family sells its house for $136,000. They must pay closing costs of $3700 plus 2.5% of the sale price.
    c. Estimate the current mortgage balance at the time of the sale
    d. Find the total closing costs.
    e. Find the amount of money they receive from the sale after paying off the mortgage.

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    Solution Preview

    a. Find their monthly payment.

    We need to find the amount to be mortgage first.
    91,000 - 20,000 = 71,000

    PVA = W x 1 - 1 where PVA is the present value of loan
    (1 + i)n W is the ...

    Solution Summary

    This solution is comprised of a detailed explanation and calculation to answer the monthly payment, mortgage balance, and total closing costs.