Question
Freddy and Frieda Finance are looking to buy a house. They find a house that they like costing $400,000 and have a $100,000 as a
Freddy and Frieda Finance are looking to buy a house. They find a house that they like costing $400,000 and have a $100,000 as a down payment meaning they will need a mortgage loan of $300,000 if they pay their closing costs in cash. Help them evaluate some mortgage options.
1. Nautical Bank offers a 30-year fixed rate mortgage with a nominal annual rate of 3.125%. What would be the Finances monthly payment under this loan?
2. Construct an amortization schedule for the 30-year Nautical Bank loan in #1 (see section 5-18 of the textbook). What will be the Finances loan balance after 7 years of payments (after payment 84)?
3. Bank of United States offers a 15-year fixed rate mortgage with a nominal annual rate of 2.5%. What would be the Finances monthly payment under this loan?
4. Construct an amortization schedule for the 15-year Bank of United States loan in #3 (see section 5-18 of the textbook). What will be the Finances loan balance after 7 years of payments (after payment 84)?
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