1. Suppose you are considering buying a house with a market price of $225,000. You plan on making a down payment of 15% and financing the remainder using a 30 year mortgage with a fixed interest rate of 6.25%.

1. What would the monthly payment be?
2. Your friend suggests you might want to consider a 15 year loan. Assuming interest rates on 15 year loans are only 5.0 %, What would your monthly payment be if you chose the 15 year loan instead?
3. After being in the house for four years, interest rates have dropped to 5% and you would like to refinance your loan for another 30 year term.

Balance after four years:

4. What would be the new monthly payments after re-financing?
5. Suppose you are wondering if you continued to make your monthly payments in the amount before re-financing. How long will it take to pay off the mortgage?