MTH108 House Project, Part III Instructions: This is the third part of a course-long project. Show all work for each section. Any paragraphs should be typed and written in complete sentences. Use Times New Roman, 12-point font and double space. Cite any resource(s) you use - click the course research guide for helpful information on APA formatting. Part III: Finding Mortgage Payments (35 pts.) In this scenario, you cannot pay cash for your home (Refer to your answers in House Project, Part II) and you will need to get a loan from a financial institution. Research and find a current interest rate for both a 30-year fixed mortgage and a 15-year fixed mortgage through your bank or other source such as http://www.bankrate.com/mortgage.aspx. Note: For all of House Project Part III, the calculated loans will not require a PMI payment. 1. Record the interest rate for each loan from the bank of your choosing (remember interest rates are percentages): Loan 1: 30-year fixed mortgage (2 pts.): 3.750% Loan 2: 15-year fixed mortgage (2 pts.): 3.000% Cite your source (1 pt.): http://www.bankrate.com/mortgage.aspx? type=newmortgage&market=18&propertyvalue=312500&loan=309900&perc=20&prods=1&fic o=740&points=Zero&cs=1&ic_id=mtg_calc_todays_rates_btn 2. Suppose you decide to make a down payment of 20% of the purchase price for the 30-year fixed mortgage and 10% of the purchase price for the 15-year fixed mortgage. a. Calculate the down payment for your house for the 30-year fixed mortgage. Show all work. (2 pts.) $309,900 * 0.20 = $61,980 b. How much will you need to finance from the bank for the 30-year fixed mortgage if you pay the 20% down payment? Show all work. (2 pts.) $309,900 - $61,980 = $247,920 c. Calculate the down payment for your house for the 15-year fixed mortgage. Show all work. (2 pts.) $309,900 * 0.10 = $30,900 1 d. How much will you need to finance from the bank for the 15-year fixed mortgage if you pay the 10% down payment? Show all work. (2 pts.) $309,900 - $30,900 = $279,000 3. Calculate loan option costs. a. Loan 1: 30-year fixed mortgage with 20% down payment. Use the TVM Solver on your TI-83/84 calculator to get the monthly payment for each mortgage. N = _______________ I % = 3.750% PV = ______________ PMT = _____________ FV = ______________ P/Y = _____________ C/Y = _____________ PMT (set at End) Monthly payment for the 30-year fixed mortgage (3 pts.) = ___________ Closing costs can be an unexpected expense when buying a home. List the items included when calculating closing costs and include your source (2 pts.) Assume the cost of the items you identified above equals $2700. What is the total you could expect to pay at closing for this loan option (i.e. closing costs, down payment, and points, if applicable) Show all work. (2 pts.)?_____________ b. Loan 2: 15-year fixed mortgage with 10% down payment. Use the TVM Solver on your TI-83/84 calculator to get the monthly payment for each mortgage. N = ________________ I % = 3.000% PV = _______________ 2 PMT = _____________ FV = _______________ P/Y = _______________ C/Y = _______________ PMT (set at End) Monthly payment for the 15-year fixed mortgage (3 pts.) = ___________ Using the same $2700 for closing costs mentioned in part a, what is the total you could expect to pay at closing for this loan option. Show all work. (2 pts.)?_____________ Suppose your bank were offering a special deal where you could put 0% down for a 30-year fixed loan but the interest rate was 1.5% higher (penalty for putting nothing down) than the interest rate for the 30-year fixed with 20% down. Calculate the mortgage payment for this situation. c. Loan 3: 30-year fixed mortgage (with penalty) Use the TVM Solver on your TI-83/84 calculator to get the monthly payment for each mortgage. N = ________________ I % = _______________ PV = _______________ PMT = _____________ FV = _______________ P/Y = _______________ C/Y = _______________ PMT (set at End) Monthly payment for the 30-year fixed mortgage (with penalty) (3 pts.) = ___________ 3 Using the same $2700 for closing costs mentioned in part a, what is the total you could expect to pay at closing for this loan option. Show all work. (2 pts.)?____________ Suppose your bank were offering a lower interest rate for a 15-year fixed loan if you pay 4 points (4% of the loan amount) as part of your closing costs (not rolled into your mortgage amount). You are still required to put 10% down for a 15-year fixed loan but your interest rate is now 1.0% lower. Calculate the mortgage payment for this situation. d. Loan 4: 15-year fixed mortgage (with points) Use the TVM Solver on your TI-83/84 calculator to get the monthly payment for each mortgage. N = ________________ I % = _______________ PV = _______________ PMT = _____________ FV = _______________ P/Y = _______________ C/Y = _______________ 4 PMT (set at End) Monthly payment for the 15-year fixed mortgage (with points) (3 pts.) = __________ Using the same $2700 for closing costs mentioned in part a, what is the total you could expect to pay at closing for this loan option. Show all work. (2 pts.)?____________