Mortgage Loans Prelude: You will find a home for sale in the Metropolitan Detroit area that you would like to buy. You can be realistic or make an aspirational choice. Record the asking price of the home and record where you found the house for sale in the citations. If it is on the MLS system, then record the MLS number. Typically when buying a house there is some negotiation involved. There are also fees to make sure the property is actually owned by the seller, fees to the company issuing the mortgage, fees to an appraiser, fees to the county and so on. For the purpose of this project we will assume that the seller has agreed to pick up the fees and that you agree to pay the asking price. Assume that you will finance 80% of the asking price of the home. Find a bank that is offering both 30 and 15 year fixed rate loans with 0 points. Record the rates. Also, record where you found the rates and the date on which you found them in your citations. Work To Include PARTI: Using an initial principal of 80% of the purchase price, 360 month term (30 years) and the interest rate you found for a 30 year loan create an amortization table for the loan. Label your columns month, interest payment and principal payment. You must use a spreadsheet and not a website. You can, of course, check your work on a lender's website. How much total interest would you pay for the loan? What percent of your payments would go to interest? PART II: Using an initial principal of 80% of the purchase price, 180 month term (15 years) and the interest rate you found for a 15 year loan create an amortization table for the loan. Label your columns month, interest payment and principal payment. Again, you must use a spreadsheet. How much total interest would you pay for the loan? What percent of your payments would go to interest? How much less interest would you pay than you would for the 30 year loan? Did anything surprise you about the last two answers? Explain why or why not. Mortgage Loans Prelude: You will find a home for sale in the Metropolitan Detroit area that you would like to buy. You can be realistic or make an aspirational choice. Record the asking price of the home and record where you found the house for sale in the citations. If it is on the MLS system, then record the MLS number. Typically when buying a house there is some negotiation involved. There are also fees to make sure the property is actually owned by the seller, fees to the company issuing the mortgage, fees to an appraiser, fees to the county and so on. For the purpose of this project we will assume that the seller has agreed to pick up the fees and that you agree to pay the asking price. Assume that you will finance 80% of the asking price of the home. Find a bank that is offering both 30 and 15 year fixed rate loans with 0 points. Record the rates. Also, record where you found the rates and the date on which you found them in your citations. Work To Include PARTI: Using an initial principal of 80% of the purchase price, 360 month term (30 years) and the interest rate you found for a 30 year loan create an amortization table for the loan. Label your columns month, interest payment and principal payment. You must use a spreadsheet and not a website. You can, of course, check your work on a lender's website. How much total interest would you pay for the loan? What percent of your payments would go to interest? PART II: Using an initial principal of 80% of the purchase price, 180 month term (15 years) and the interest rate you found for a 15 year loan create an amortization table for the loan. Label your columns month, interest payment and principal payment. Again, you must use a spreadsheet. How much total interest would you pay for the loan? What percent of your payments would go to interest? How much less interest would you pay than you would for the 30 year loan? Did anything surprise you about the last two answers? Explain why or why not
