Chapter 8.7, Problem 10E

In Exercises 1-10, use

$PMT=\frac{P\left(\frac{r}{n}\right)}{\left[1-{\left(1+\frac{r}{n}\right)}^{-nt}\right]}$

to determine the regular payment amount, rounded to the nearest dollar.

The cost of a home is financed with a $160,000 30-year fixed-rate mortgage at 4.2%

a. Find the monthly payments and the total interest for the loan.

b. Prepare a loan amortization schedule for the first three months of the mortgage. Round entries to the nearest cent.

Payment Number	Interest	Principal	Loan Balance
1
2
3

$•$

Spend no more than 28% of your gross monthly income for your mortgage payment.

$•$

Spend more than 36% of your gross monthly income for your mortgage debt.

Round all computations to the nearest dollar.