1. Maria and John have been married for 2 years and just learned that they are pregnant. They have been renting a small apartment but decide to purchase a house.

They find one that is selling for $420,000. They decide to make a 20% down payment on a 3.5% interest 30-year mortgage.

Answer each of the following questions separately, showing all work

a.How much will they need for the down payment?

b.What will be the mortgage amount (ie the principal)

c.How much will their monthly payment be for the principal and interest?

d.How much total interest will they pay if they take the full 30 years to pay off the mortgage?

(2) They decide to shop for the new house.They choose items that amount to $1200.00.The store has 2 options for purchasing:

I. financing at 4.5% simple interest per year for 2 years with a 20% down payment.

II.no down payment and financing at 5.2% simple interest for 3 years.

Which option should they choose if they want the smallest finance charge? Show all steps to support answer.

b.Which option should they choose if they want the smallest total installment price? Show all steps to support answer

c.Which option should they choose if they want the smallest amount of the monthly payment? Show all steps to support answer

d.If they decide to defer any purchases and take a$1200 bonus that Maria will be getting from work and invest it at 2% per year simple interest, how long will it need to be invested to earn $300 interest?