13. Mortgage payments Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump sum amount as a loan in the beginning, and then you make monthly payments to the tender You've decided to buy a house that is valued at $1 million. You have $300,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $700,000 mortgage, and is offering a standard 30-year mortgage at a 129 fixed nominal interest rate (called the loan's annual percentage rate of APR). Under this loan proposal, your mortoage payment will be per month. (Note: Round the final value of any interest rate used to four decimal places.) Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a 15-year, $700,000 loan at a fixed nominal interest rate of 12% (APR), then the difference in the monthly payment of the 15-year mortgage and 30 year mortgage will be (Note: Round the final value of any interest rate used to four decimal places.) It is likely that you won't like the prospect of paying more money each month, tIf you do out a 15-year mortgage, you will mal far fewer payments and will pay a lot less in interest. How much more total interest will you pay over the life of the loan if you take out a 30-year mortgage instead of a 15-year mortgage? 51,382.261.75 $1,274,272.56 $1.490,250.96 $1,079,892.00 Your mend suggest maryous year morge, Decorar mortgages toong anyone way or money on your hank approves a 15-year $700,000 Toon at a fixed nominal Interest rate of 12% (AR), then the difference in the monthly payment of the 15 year mortgage and 30 year mortowe will be Note: Hound the final value of any interest rate used to four decimal places) It is likely that you won't be the prospect of paying more money each month, but if you do take out a 15 year mortgage you will make for fewer payments and will pay a lot toes in interest. How much more total interest will you pay over the life of the Town If you take out a 30 voar mortgat instead of a 15 year mortgage? A $1,362,261,76 O $1,274,272.56 $1,490,250.96 $1,079,892.00 Which of the following statement is not true about mortgages? Mortgages always have a fixed nominat interest rate The ending balance of an amortized loan contract will be zero Mortgages are examples of amortized loans The payment allocated toward principal in an amortized loan is the residual balance that is the difference between total payment and the interest due
