Answer
The value of the mortgage amount is determined by removing the amount of down payment from price of the home/asset.
Work Step by Step
A long-term installment loan for the purpose of buying a home is called a mortgage. Down payment is the amount paid by the mortgagor to lend the money in place of mortgaging the property held by him/her.
It can be computed using the equation as shown below:
\[\text{Mortgage amount}=\text{Sale price}-\text{Down payment}\]
Example:
Suppose a home is available for sale at \$50,000 and the down payment for the house is \$5000. Compute the Mortgage amount.
Compute the mortgage amount with the below mentioned formula:
\[\begin{align}
& \text{Mortgage amount}=\text{Sale price}-\text{Down payment} \\
& =\$50,000-\$5000\\&=\$45,000\end{align}\]
Hence, the mortgage amount is\[\$45,000\].
