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Vivien wants to buy a house. The house she wants is listed for $300,000, and she wants to avoid PMI insurance. She can get a
- Vivien wants to buy a house. The house she wants is listed for $300,000, and she wants to avoid PMI insurance. She can get a fixed rate mortgage at 4.25% for 30 years. Dont worry about taxes and insurance for any of these questions, just keep in mind that those would need to be considered as well.
- What down payment will she need? (show your work)
- If Vivian makes her down payment and takes out the loan described, what will be her monthly payment?
Price |
|
Down Payment |
|
PV |
|
I |
|
N |
|
FV |
|
PMT |
|
- If Vivian makes her down payment and takes out the loan described, what will be the total cost of the house? (show your work)
- What would be the total cost of the house if she took out a 15-year mortgage at 3.125%?
Price |
|
Down Payment |
|
PV |
|
I |
|
N |
|
FV |
|
PMT |
|
(PMTx12) x 15 years, plus the Down Payment = Total Cost |
|
- What if Vivien can only pay a 10% down payment, what would her first monthly payment be for the 30 year mortgage at 4.25%? (For this example the PMI insurance cost is 1% of the loan amount per year.)
Price |
|
Down Payment |
|
PV |
|
I |
|
N |
|
FV |
|
PMT |
|
PMI |
|
PMT + PMI = First Monthly Payment |
|
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