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When applying for a mortgage, find one that allows you to contribute more money than the required monthly payment. The following problems illustrates why. Let's

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When applying for a mortgage, find one that allows you to contribute more money than the required monthly payment. The following problems illustrates why. Let's say that you have a 30- year $133,500 fixed-rate mortgage at 4.05% interest compounded monthly. Instead of paying the regular monthly payment for the mortgage, you decide to add an additional $130 to each of your monthly payments. By paying the extra $130 a month, the extra amount in each payment is applied directly to reducing the principal. This means that (1) the length of the loan is reduced since the principal will be reduced faster (than if no extra amount was paid with your monthly payment) and (2) you eventually pay less in interest than if you were to pay the only regular monthly payment required. Answer the following: A. Find out how many years it will take you to pay off the loan if you were to pay the additional $130 with each monthly payment? Use the TVM Solver. Show how you arrived at your answer. (1 points) B. How much money will you save in interest if you pay the additional $130 with each monthly payment than if you did not pay any additional amount each month? Show how you arrived at your answer and round it to the nearest dollar. (2 points) When applying for a mortgage, find one that allows you to contribute more money than the required monthly payment. The following problems illustrates why. Let's say that you have a 30- year $133,500 fixed-rate mortgage at 4.05% interest compounded monthly. Instead of paying the regular monthly payment for the mortgage, you decide to add an additional $130 to each of your monthly payments. By paying the extra $130 a month, the extra amount in each payment is applied directly to reducing the principal. This means that (1) the length of the loan is reduced since the principal will be reduced faster (than if no extra amount was paid with your monthly payment) and (2) you eventually pay less in interest than if you were to pay the only regular monthly payment required. Answer the following: A. Find out how many years it will take you to pay off the loan if you were to pay the additional $130 with each monthly payment? Use the TVM Solver. Show how you arrived at your answer. (1 points) B. How much money will you save in interest if you pay the additional $130 with each monthly payment than if you did not pay any additional amount each month? Show how you arrived at your answer and round it to the nearest dollar. (2 points)

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