Question
A) You decide to purchase a home that costs $140,000. If you make a down payment of $20,000 and borrow the rest at a 4.25%
A) You decide to purchase a home that costs $140,000. If you make a down payment of $20,000 and borrow the rest at a 4.25% 30-year mortgage, calculate your monthly payment.
B) Now recalculate the monthly payment if you had to borrow at 9.5% instead of 4.25%.
C) Assume that you plan to move after four years. In order to do so, you need to pay off the remaining balance on your mortgage (the present value of your remaining payments). Calculate the payoff value for both the 4.25% mortgage and the 9.5% mortgage.
D) For each mortgage (4.25% and 9.5%) calculate
The total payments made over the four-year period
The amount that went to pay principal
The amount that went to pay interest (hint: principal and interest should add up to total payments made).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started