To calculate the monthly payment for a fixed-rate mortgage, we use the standard mortgage formula:

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

Where:

• $M$ is the monthly payment.
• $P$ is the loan amount ($230,250$ in this case).
• $r$ is the monthly interest rate (annual rate divided by 12: $10\% \div 12 = 0.008333$).
• $n$ is the total number of payments (loan term in years multiplied by 12: $25 \times 12 = 300$).

Plugging in the values:

$M = 230,250 \times \frac{0.008333(1 + 0.008333)^{300}}{(1 + 0.008333)^{300} - 1}$

Let me calculate this for you. Defining the given values P = 230250 # Loan amount annual_rate = 0.10 # Annual interest rate r = annual_rate / 12 # Monthly interest rate n = 25 * 12 # Total number of payments (25 years)

Monthly payment calculation formula

M = P * (r * (1 + r)**n) / ((1 + r)**n - 1) MThe monthly payment is approximately $2092.28 (rounded to the nearest cent).

Would you like me to explain any part of the calculation in more detail?

Follow-up Questions:

1. What are the advantages of fixed-rate mortgages compared to variable-rate ones?
2. How does increasing the loan term affect the monthly payment and total interest paid?
3. What happens to the monthly payment if the interest rate decreases by 1%?
4. Can you explain the impact of extra monthly payments on the loan term and interest savings?
5. How is this formula derived, and what does each component represent?

Tip:

When budgeting for a mortgage, remember to include taxes, insurance, and potential maintenance costs beyond the calculated monthly payment.