What is the monthly payment for a loan amount of $150,000, term 30 years, and an interest rate of 7%?

To determine the monthly payment for a loan amount of $150,000 with a term of 30 years at an interest rate of 7%, it is essential to use the formula for a fixed-rate mortgage which is often expressed as:

M = P [r(1 + r)^n] / [(1 + r)^n – 1]

Where: M = monthly payment P = principal loan amount ($150,000) r = monthly interest rate (annual rate divided by 12 months) n = number of payments (loan term in months)

1. Convert the annual interest rate to a monthly rate by dividing the annual rate by 12: 7% annual interest rate = 0.07/12 = 0.005833 (approximately).

2. Calculate the total number of payments: 30 years = 30 x 12 = 360 payments.

3. Plugging the values into the formula: M = 150,000 [0.005833(1 + 0.005833)^360] / [(1 + 0.005833)^360 – 1].

Using this formula leads to the calculation: M ≈ 150,000 [0.005833(7