Humber/Ontario Real Estate Course 4 Exam Practice

What is the monthly mortgage payment for a $230,000 mortgage at 5.5% with a 20-year amortization and a monthly payment factor of 6.843913?

1. $1,054.17

2. $1,574.10

3. $786.16

4. $1,261.40

5. $1,423.91

6. $1,789.25

The correct answer is: $1,574.10

To calculate the monthly mortgage payment, you can use the monthly payment factor, which simplifies the process of determining mortgage payments based on the total mortgage amount, the interest rate, and the amortization period. The monthly payment factor tells you how much you pay per $1,000 of the mortgage amount. In this case, you have a $230,000 mortgage, and the monthly payment factor is 6.843913. To find the monthly payment, you first convert the mortgage amount into thousands by dividing it by 1,000, resulting in 230. Then, you multiply this amount by the payment factor: \[ Monthly Payment = Mortgage Amount (in thousands) \times Monthly Payment Factor \] \[ Monthly Payment = 230 \times 6.843913 \] \[ Monthly Payment ≈ 1,574.10 (after performing the calculation) \] This calculation shows that the correct monthly mortgage payment is approximately $1,574.10. The monthly payment of this value matches the corresponding choice provided. Understanding this calculation is crucial, as it highlights how the monthly payment factor directly relates to the mortgage details. The result reflects the loan amount, interest rate, and amortization period effectively, keeping in