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You are planning to purchase a house that costs $550,000, and you will use a 30-year mortgage. You want to determine whether or not you
You are planning to purchase a house that costs $550,000, and you will use a 30-year mortgage.
You want to determine whether or not you should save some of your money and put only 10% down on your house. Because you are only putting 10% down, lenders require that you purchase private mortgage insurance (PMI). You want to pay the PMI with a monthly payment (for the same 30-year). Assume that PMI is 1% of the mortgage amount and has the same annual interest rate of 3.85%.
- Calculate your total monthly payment (mortgage payment plus PMI).
- Calculate the total cost of financing your home purchase (interest plus PMI).
- Calculate the total cost of the home purchase. (Down payment plus principle (loan amount) plus interest plus PMI.)
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