Lesson 4: Paying the Mortgage Consumer Math p. 88-89

Paying the Mortgage Several kinds of mortgage loan exist. The most common loan is called a fixed-rate mortgage. The interest rate and the monthly payment on principal and interest remain the same until the loan in paid. On a variable-rate mortgage, the interest rate and the monthly payments may change periodically.

Example Joseph wants to buy a home. He has enough money for a large down payment. He took out a fixed-rate mortgage for $90,000, to be paid in 30 years. The bank charges him 8% interest. What is his monthly payment? Joseph finds the answer quickly by using the following table. He looks down the column for 8%. He looks across the row for $90,000. Where these two lines meet, he reads, “660.” His monthly payment will be $660.00.