About this video
This video works through a mortgage payment problem: a $250,000 home with a $30,000 down payment means borrowing $220,000 on a 30-year loan at 6.5%. Using the Khan Academy Mortgage Calculator (loan amount, interest rate as a number, and term in years), the monthly loan payment comes out to $1,390.55, ignoring taxes and insurance.
You'll be able to
- find the loan amount by subtracting the down payment from the home price.
- use a mortgage calculator to find a monthly loan payment.
- enter the loan amount, interest rate and term correctly into a calculator.
Key words
- Down payment
- The money you pay upfront so you borrow less than the full home price.
- Loan term
- How long you have to pay back the loan, such as 30 years.
- Mortgage calculator
- A tool that works out the monthly payment from the loan amount, interest rate and term.
Transcript
- [Presenter] We're told while looking through home listings, you find a home you love listed for $250,000. You want to check what your monthly payment might be. You have $30,000 for a down payment so you would need to borrow $220,000 on a 30 year loan with a 6.5% interest rate.
Ignore any additional costs like taxes or insurance. What would your loan payment be? And have a go at that. And I don't expect you to do all of the basic math here. This is actually, you need a little bit of advanced math, which we also teach on Khan Academy, but that's not the expectation here.
We expect you to use a mortgage calculator and we provide for that on Khan Academy. That's the Khan Academy Mortgage Calculator. So using that, see if you can solve that or maybe you don't have access to it so I'll just do it now. Alright, so we wanna know what our loan payment would be.
Well, it looks like that would be the monthly payment calculator. We are going to say our loan amount. So we're going to borrow $220,000. It wouldn't be the whole house amount 'cause we have some down payment. So the loan amount here is $220,000. Our interest rate is 6.5.
It looks like, this says, "enter a number between zero and a hundred." So it looks like we don't say 6.5%. We'll just write 6.5. It should say interest rate in percentage. Maybe we'll fix that. And then loan term, "enter an amount of years or months." So we know this is a 30 year loan, so we'll put in 30 right over there and it's 30 years.
And there you have it. It calculated our monthly payment, 1390.55. And we could write that right over here. 1390.55 and we're done.
Video © Khan Academy, used under CC BY-NC-SA. Watch on Khan Academy. Puzzicle is not affiliated with Khan Academy.