A friend bought a house 15 years ago, taking out a $120,000 mortgage at 6% for 30 years. How much does she still owe on the mortgage?

You can afford a $700 per month mortgage payment. You’ve found a 30 year loan at 5% interest.
a. How big of a loan can you afford?
b. How much total money will you pay the loan company?
c. How much of that money is interest?

Marie can afford a $250 per month car payment. She’s found a 5 year loan at 7% interest.
a. How expensive of a car can she afford?
b. How much total money will she pay the loan company?
c. How much of that money is interest?

1) First you need to find the monthly payment.
[tex]m = P\frac{i(1+i)^{360}}{(1+i)^{360} - 1}, P = 120,000, i = 0.005 \\ \\ m = 719.46[/tex]

Next, you need a function for balance remaining at time 't'.
[tex]B(t) = (P-\frac{m}{i})(1+i)^t +\frac{m}{i} \\ \\ B(180) = 85,258.8[/tex]

So after 15 years, she still owes 85,258.80 on the mortgage.

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