Arnold graduated from University 5 years ago and has been working since then. he wants to buy his first house costing $325,000 and has obtained a loan from TD Bank. A minimum down payment of 15% would be required and the bank will provide the difference. His grandparent have told him that they will cover her down payment. a. TD Bank has quoted her mortgage interest rate is 4.5%; this rate would be compounded semi-annually, while her payments would be made monthly.

What is the effective monthly interest rate (EMR) that he would pay?

Calculate his monthly mortgage payment, assuming 15% down payment from his grandparents and a mortgage maturity of 25 years.

Given (b) above, how much his payment in the 2^nd month will go toward repayment of principal and how much is interest payment?

Assuming that five years later, interstates drop to 3.2% and he decides to refinance the mortgage. How much would he have paid in interest and how much of the original loan have you paid over the five years?

Suppose he decides to refinance your mortgage to take advantage of the reduced interest rate. How would his monthly payments change if he could refinance his mortgage at 3.2% (with a 20-year term loan)?

Suppose he kept his monthly payments at the original amount found in (b) above at 4.5%, but refinanced the at 3.2%, how long would it take him to pay off the mortgage?