Wally Bee purchased a new home for $250,000 with a $40,000 down payment. He financed the remainder with a 4% mortgage for 30 years.

QUESTION 1

What is his monthly payment?

		$1089.66
		$946.31
		$1002.54
		$988.32

1 points

QUESTION 2

If Wally had originally planned on using a 15 year mortgage (also at 4%), how much would Wally save in interest expense compared to the 30 year mortgage?

		$72,658
		$67,344
		$81,308
		$63,564

1 points

QUESTION 3

Prepare a two month amortization schedule. (Round interest factor to 4 decimals) What is the principal reduction for month 2?

Month	Loan Balance	Payment	Interest	Principal
0
1
2

$351.54

$401.65

$388.21

$310.56

Wally's bank has offered to lower the 4% interest rate on his 30 year loan to 3.75% if Wally will pay 1 1/4 points. What will the points cost Wally?

		$1895
		$2625
		$3155
		$3365

1 points

QUESTION 5

Tedd E. Bear has an annual salary of $48,000 with no other loans outstanding. Using the 25% guideline from class and with a 20% down payment, how expensive of a home can Tedd purchase using a 4%, 30 year mortgage?

		$251,353
		$268,246
		$279,423
		$261,825