You have been dreaming of owning lake front property, and are excited to have found on a well-maintained 3 bedroom home on Pewaukee Lake for at $338,000. You have been pre-approved for a 30-year fixed rate mortgage at 4.5% annual interest with a 20% down payment and $2,500 due at closing, but did not spend much time shopping around for a lender. Your friend, who works for Waterstone Mortgage here in Pewaukee, tells you two of their current options. The first option from Waterstone is a 30-year, 4.25% mortgage with a 15% down payment required, and $2,000 in closing costs. The second option from Waterstone is a 20-year, 4% mortgage with a 20% down payment required, and $1,500 in closing costs. Note that the yearly taxes on the property average $4,599, and annual homeowner's insurance is $1,548. Assume you have budgeted $2,000 monthly for your adjusted monthly payment (PITI) and have saved $72,000 to cover your down payment and closing costs. Determine which mortgage would be the best option and explain why you made your choice. Note that while there are correct answers for the mathematical calculations in this problem, choosing a best option is a personal decision based on a variety of factors. Answer the following questions on your own paper (and using the table on the back of this sheet): 1. What is your objective? Using complete sentences, explain the problem you are trying to solve in your own words. 2. Use the table on page 2 to compare your three options. Show your work when appropriate and write your solutions in each box. Please use your own paper to show your own work. 3. After completing the table, answer the following question: Which loan would you choose and why? Specifically explain why you choose eliminated the two mortgages you did not choose, and what made you choose the mortgage you did choose. Your Preapproved Loan Waterstone (1) Waterstone (2) Annual Interest Rate Length of Loan in Years Down Payment Required % Closing Costs Down Payment Amount Total Due at Closing Monthly Payment (M) Principal & Interest Interest Paid Adjusted Monthly Payment (PITI) You have been dreaming of owning lake front property, and are excited to have found on a well-maintained 3 bedroom home on Pewaukee Lake for at $338,000. You have been pre-approved for a 30-year fixed rate mortgage at 4.5% annual interest with a 20% down payment and $2,500 due at closing, but did not spend much time shopping around for a lender. Your friend, who works for Waterstone Mortgage here in Pewaukee, tells you two of their current options. The first option from Waterstone is a 30-year, 4.25% mortgage with a 15% down payment required, and $2,000 in closing costs. The second option from Waterstone is a 20-year, 4% mortgage with a 20% down payment required, and $1,500 in closing costs. Note that the yearly taxes on the property average $4,599, and annual homeowner's insurance is $1,548. Assume you have budgeted $2,000 monthly for your adjusted monthly payment (PITI) and have saved $72,000 to cover your down payment and closing costs. Determine which mortgage would be the best option and explain why you made your choice. Note that while there are correct answers for the mathematical calculations in this problem, choosing a best option is a personal decision based on a variety of factors. Answer the following questions on your own paper (and using the table on the back of this sheet): 1. What is your objective? Using complete sentences, explain the problem you are trying to solve in your own words. 2. Use the table on page 2 to compare your three options. Show your work when appropriate and write your solutions in each box. Please use your own paper to show your own work. 3. After completing the table, answer the following question: Which loan would you choose and why? Specifically explain why you choose eliminated the two mortgages you did not choose, and what made you choose the mortgage you did choose. Your Preapproved Loan Waterstone (1) Waterstone (2) Annual Interest Rate Length of Loan in Years Down Payment Required % Closing Costs Down Payment Amount Total Due at Closing Monthly Payment (M) Principal & Interest Interest Paid Adjusted Monthly Payment (PITI)