Suppose that you decided to buy a new house. The house you want to buy costs $520,000 and the interest rate is 7%. You currently have $130,000 and are required to put a 20% down payment plus an additional 3% of the loan amount as closing costs.

1) When will you have enough money for the down payment and closing costs, assuming that the $80,000 is the only investment that you make?

2) Suppose that you plan to buy the house in five years. How much do you need to save every month to purchase the house?

3) Suppose that the price of the house is the same after three years and that you can get a 30-year mortgage from your bank at an interest of 3.2%. What are the monthly payments on the loan? How much do you have to pay the bank each year?

4) How much do you pay as interest and principal from the first monthly payment?