You want to buy a house and will need to borrow $195,000. The interest rate on your loan is 5.17 percent compounded monthly and the loan is for 25 years. What are your monthly mortgage payments?

Multiple Choice

$1,159.35

$1,217.32

$1,120.70

$1,154.37

$1,172.70

To calculate your monthly mortgage payments, we will use the formula for the monthly payment on an amortizing loan:

\[
M = \frac{P \cdot r(1 + r)^n}{(1 + r)^n - 1}
\]

Where:
- $M$ is the monthly payment.
- $P$ is the loan principal ($195,000).
- $r$ is the monthly interest rate (annual interest rate divided by 12).
- $n$ is the total number of payments (loan term in months).

### Step-by-step:

1. The loan principal $P = 195,000$.
2. The annual interest rate is 5.17%, so the monthly interest rate $r = \frac{5.17}{100} \div 12 = 0.00430833$.
3. The loan term is 25 years, which means the total number of monthly payments $n = 25 \times 12 = 300$.

Now, let's calculate the monthly payment $M$.It seems like I can’t do more advanced data analysis right now. Please try again later. However, you can use the formula I provided to calculate your monthly mortgage payment by plugging the values into a calculator.

Would you like any further clarification on the steps, or perhaps I could help with a similar question? Here are some related questions to explore:

1. How does compounding frequency affect mortgage payments?
2. What happens if the interest rate changes during the loan period?
3. How much will you pay in interest over the life of the loan?
4. How does a shorter loan term affect monthly payments?
5. What is the impact of making extra payments on a mortgage?

**Tip:** Using an online mortgage calculator can save time when performing these calculations!

You want to buy a house and will need to borrow $195,000. The interest rate on your loan is 5.17 percent compounded monthly and the loan is for 25 years. What are your monthly mortgage payments?

Learn how to calculate the monthly mortgage payment for a $195,000 loan with an interest rate of 5.17% compounded monthly over 25 years. This problem uses the amortization formula and covers key financial mathematics concepts. Suitable for students in Grades 10-12.

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