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Week 10 Assignment

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Lovepreet malhi
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18 views

Week 10 Assignment

Uploaded by

Lovepreet malhi
Copyright
© © All Rights Reserved
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Problem:

You have decided to purchase a house for $225,000 nd are evaluating your options for the mortgage.
Assume your down payment will be 20% of the purchase price, payment will be made monthly and the
first payment will be made one month from today.

** you must use formulas to solve

a. what is the mortgage amount?


b. If you select the 30-year mortgage, the interest rate will be 4.5% annually, what is the monthly payment
c. Suppose that the bank is also offering a 15-year mortgage at 4.25% annually, What is the monthly payment?
d. What is the total of all payments for each mortgage?
e. Which mortgage cost you the least over the life of the mortgage?

a. What the mortage amount ?(The amount you borrow)


Purchase price of home = $225,000
Down payment = 20%
Mortage amount = $225000*(1-20)
Value of mortage amount = $180,000.00

b. If you select the 30-year mortgage, the interest rate will be 4.5% annually, what is the monthly payment?
Value of home loan = $180,000
Tenure = 30 years
Annual interest rate = 4.50%

Monthly payment = $912.03

c. Suppose that the bank is also offering a 15-year mortgage at 4.25% annually, What is the monthly payment?
Value of home loan = $180,000
Tenure = 15 years
Annual interest rate = 4.25%

Monthly payment = $1,354.10

d. What is the total of all payments for each mortgage?


Total Pymt. in 30 year Mtg. = $912.03*30*12
= $328,332.08
Total Pymt. In 15 year Mtg. =
= $1354.10*15*12
$243,738.21
e. Which mortgage cost you the least over the life of the mortgage?
Ans. Total Cost in 15 year loan is lower than 30 year loan. 15 year loan will cost the least over the life of the mortage
mortgage.
thly and the

onthly payment
monthly payment?

monthly payment?

he monthly payment?
er the life of the mortage.

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