3. You are getting ready to buy your first home. As a first-time home-buyer with a secure job and excellent credit, you qualify for a loan that requires no down payment. The monthly payments you are able to make are $1200 dollars per month

a. You secure a loan at a fixed rate of 3.5% annual interest, compounded monthly, for 30 years. Based on a realistic monthly house payment you hope to be able to make in five years($1200), what loan principal can you afford? Calculate the total paid over the life of the loan, and the total interest paid over the life of the loan. At the end of one year, you receive two different offers regarding your mortgage.

b. The biweekly option: Under the bi-weekly plan, you agree to pay half of your current monthly payment every two weeks. Calculate the time required to pay off the loan, the total amount paid over the life of the loan and the total interest paid over the life of the loan. (Remember, you have paid the first year under the original terms. Keep this in mind as you calculate.) c. The refinancing option: In general, mortgage rates have gone down and you have the option to refinance the remaining loan balance with a 20-year mortgage at 3.5%. Closing costs for choosing this option are $1500 and will be put into the new loan. Calculate the monthly loan payment, the total paid over the life of the loan, and the total interest paid over the life of the loan. (Remember, you have paid the first year under the original terms. Keep this in mind as you calculate.)