**Problem: ** This is the problem that I am experiencing. I am aware of the formula:
PMT = P(r/n) / {1-(1+r/n)^-nt where as:
Option 1: n= 12 t= 15 r= .075 p= 19500
Option 2: n= 12 t=30 r= .075 p= 19500
I understand the first thing to do is to take the price of the home = $130,000 and then multiply by the required downpayment= 15% or .15.
Thus, $130,000 x 0.15 = 19500.
The required down payment would be $19,500. So we would need $130,000 - $19,500= $110, 500 in order to purchase the mortgage.
So after this, would I still need to do the point system where I convert the % to decimal? (1% = .01) to determine how much needs to be paid? The question doesn't mention the point that is needed.
To find the monthly payment then I would use the formula above and plug in one option at a time.
PMT = $19,500( 0.075/12) / {1-(1+ 0.075/12)^ -12(15)
I would solve the top portion first, then put it to the side: 121.875
Then solve the bottom portion second: .6742089178
121.875 / .6742089178 = 180.7674102 or 181, rounding to the nearest dollar.
When I enter the information, it indicates that it is wrong for the first option. Once I understand what I did wrong in the first option then I can process with the same method for the second option.