Mortgages

You decide to buy a house! The home is priced at $279,000 and the bank has agreed to finance your home at 5.1% for 30 years.

(Note: Excel approximations do not include property taxes or insurance.)

Use the Amortization Worksheet and Module 2 Formula Sheet to answer the following questions:

What is the monthly payment?

How much of the first payment is interest? How much of that first payment actually goes to reducing the principal?

At which month did you pay approximately half of the mortgage? Is this halfway through your mortgage?

Lets explore making extra payments on your mortgage. Change the payment value in cell B3 to be $100 more than it is now.

If you pay just $100 more each month, when will you make your last payment?

How much time does that cut off of your mortgage (how many months do you not have to make a mortgage payment)?

If you make the payments which are $100 larger, how much do you pay over the life of the loan?

If you made the originally payments, without paying an extra $100 per month, how much do you pay over the life of the loan?

Therefore, by paying an additional $100 per month, you will save ________ over the life of the mortgage.