Word problem: formula for finding monthly payment amt

[dirtyboy]

“The mortgage on a loan of $100,000 is $800 per month. Assuming the rate is the same, what would the monthly payment be for a $120,000 loan?”

I believe the answer is $960. I did this by dividing 100,000 by 800. I got 125 which I used as a constant. From there I used trial and error to find 960 (960 * 125 = 120,000).
I’m not sure about my answer. More importantly how do I do this problem using algebraic formula?

 

[stapel]

“The mortgage on a loan of $100,000 is $800 per month. Assuming the rate is the same, what would the monthly payment be for a $120,000 loan?”

There are so many issues involved in computing a mortgage payment that you'll need to provide us with all of the formulas and assumptions you're supposed to be using. I would guess that the property taxes don't change either, nor the insurance premiums, both of which are standardly included in one's mortgage payment. But what other things should be assumed?

Please be complete, including providing clear definitions of the variables in the formula(s) you're using. Thank you!

Eliz.

 

[Denis]

If the payment is ONLY principal + interest, then 960 is correct.

 

[Deleted member 4993]

“The mortgage on a loan of $100,000 is $800 per month. Assuming the rate is the same, what would the monthly payment be for a $120,000 loan?”

I believe the answer is $960. I did this by dividing 100,000 by 800. I got 125 which I used as a constant. From there I used trial and error to find 960 (960 * 125 = 120,000).
I’m not sure about my answer. More importantly how do I do this problem using algebraic formula?

120,000 = 1.2 * 100,000

payment = 1.2 * 800 = 960 (assuming Denis's assumption holds) <<< no trial and error needed

 

[TchrWill]

“The mortgage on a loan of $100,000 is $800 per month. Assuming the rate is the same, what would the monthly payment be for a $120,000 loan?”

I believe the answer is $960. I did this by dividing 100,000 by 800. I got 125 which I used as a constant. From there I used trial and error to find 960 (960 * 125 = 120,000).
I’m not sure about my answer. More importantly how do I do this problem using algebraic formula?

Since P/R = [(1 - (1 + i)^-n]/i, 100,000/800 = 120,000/X making X = $960/month.

P = the principal loan amount
R = the monthly payment
i = the periodic interest = I/100m
m = the number of interest bearing per year
n = the total number of interest bearing periods.

Without knowing the annual interest rate, the number of compounding periods per year and the number of years, you cannot work the problem algebraically.

The $960 answer assumes that all these unknowns remain the same.