To determine the monthly principal and interest payment for a 15-year mortgage with an amount of $85,000 and an annual percentage rate (APR) of 7.0%, we need to use the standard mortgage payment formula:

$M = P \times \frac{r(1+r)^n}{(1+r)^n - 1}$

where:

• $M$ = Monthly payment
• $P$ = Principal amount ($85,000)
• $r$ = Monthly interest rate (APR divided by 12 months)
• $n$ = Total number of monthly payments (15 years × 12 months/year = 180)

Step 1: Calculate the monthly interest rate

The annual interest rate is 7.0%, so the monthly rate is:

$r = \frac{7.0\%}{12} = 0.07 / 12 = 0.0058333$

Step 2: Calculate the total number of payments

For a 15-year mortgage:

$n = 15 \times 12 = 180 \, \text{payments}$

Step 3: Substitute values into the formula

$M = 85,000 \times \frac{0.0058333(1+0.0058333)^{180}}{(1+0.0058333)^{180} - 1}$

Step 4: Compute the monthly payment

I'll calculate the value for you.The monthly principal and interest payment for a 15-year mortgage with a loan amount of $85,000 at an annual percentage rate of 7.0% is approximately $764.00 (rounded to the nearest cent).

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Related Questions:

1. How would the monthly payment change if the mortgage term was 30 years instead of 15?
2. What is the total interest paid over the life of this 15-year mortgage?
3. How does the monthly payment change if the interest rate decreases to 5%?
4. What portion of the first monthly payment is allocated to principal and what portion to interest?
5. How much would be saved if an additional $100 was paid monthly towards the principal?

Tip: The longer the loan term, the smaller the monthly payments, but the total interest paid over the life of the loan increases.