Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are planning to purchase a house that costs S480.000. You plan to put 20% down and borrow the remainder. Based on your credit score,

image text in transcribed
You are planning to purchase a house that costs S480.000. You plan to put 20% down and borrow the remainder. Based on your credit score, you believe that you will pay 3.99% on a 30-year mortgage. 1. 2. Use function "PV" to calculate the loan amount given a payment of $1500 per month. What is 3. Use function "RATE" to calculate the interest rate given a payment of $1500 and a loan amount 4. For each scenario, calculate the total interest that you will have paid once the mortgage is paid 5. For each scenario, calculate the total cost of the home purchase. (Down payment plus principle 6. Assume that you plan to pay an extra $300 per month on top of your mortgage payment Use function "PMT" to calculate your mortgage payment. the most that you can borrow? of $400,000. of(There is not a function for this, enter the formula into the cell.) (loan amount) plus interest.) calculate how long it will take you to pay off the loan given the higher payment. (Use interest rate of 3.99%). Calculate how much interest you will pay in total? Compare this to the value that you calculated for #2. 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 insurance (PMI). Assume that PMI is 1% of the mortgage amount. 7. Calculate your total monthly payment (mortgage payment plus PMD. 8. Calculate the total cost of financing your home purchase (interest plus PMD). 9. Calculate the total cost of the home purchase. (Down payment plus principle loan amount) plus interest plus PMI.) 10. Compare this to the costs associated with a 20% down payment. Meme 1. Summarize the results of each of your calculations. 2.Discuss 3. Compare the costs and benefits of a 10% down payment versus a 20% down 4. Discuss Private Mortgage Insurance. What is it? Why do lenders require it? What is the benefit to the interest savings associated with an extra payment of $300 per month payment the borrower

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Trade Finance

Authors: Tarsem Bhogal, Arun Trivedi

2nd Edition

303024542X, 9783030245429

More Books

Students also viewed these Finance questions