Question

Shantel and Kwamie are planning to buy their first home. They visited a few new developments and scanned the real estate listing of preowned homes, but they have no idea how much a mortgage payment would be on a $140,000, $170,000, or $205,000 loan. They have come to you for advice. Complete parts 1.-4. Click the icon to view the monthly payment per $1,000 of amount financed table. 1. After you explain to them that they can borrow money at different rates and at different amounts of time, Shantel and Kwamie ask you to complete a chart indicating what the monthly mortgage payment would be under some possible interest rates and borrowing periods. They also want to know what their total interest would be on each if they choose a 30-year loan at 3.75% interest. Complete the chart. Amount borrowed 3.00% 15 year 3.25% 20 year 3.50% 25 year 3.75% 30 yea Total interest paid on 30-year loan $140,000 $170,000 s $205,000 $ (Type integers or decimals.)

Answer 1

First let us take the loan amount $140,000

When interest is 3% and period is 15 years:

140000 Monthly payment = 1000 *6.91

Monthly payment = 967.40

This 6.91 is found 3% column and 15 years financed row

We divide it with 1000 because the table is given for monthly payment for 1000 amount borrowed.

Like this manner we can solve the rest:

When interest is 3.25% and period is 20 years:

Monthly payment = 140 * 5.67 = $793.80...............................(140 = 140,000/1000)

When interest is 3.5% and period is 25 years:

Monthly payment = 140 * 5.01 =  $701.40

When interest is 3.75% and period is 30 years:

Monthly payment = 140 * 4.63 = $648.20

Here, we have to find interest paid on 30 years loan with 3.75% interest.

Number of payments = 30 years * 12 months = 360

Total amount paid = $648.20 * 360 =  $233,352

Amount of loan = $140,000

Therefore, Total interest paid = $233,352 - $140,000 =  $93,352

Similarly:

When the loan amount = $170,000

When interest is 3% and period is 15 years:

Monthly payment = 170 * 6.91 =  $1,174.70

When interest is 3.25% and period is 20 years:

Monthly payment = 170 * 5.67 =  $963.90

When interest is 3.5% and period is 25 years:

Monthly payment = 170 * $851.70

When interest is 3.75% and period is 30 years:

Monthly payment = 170 *  $787.10 =  $787.10

Total amount paid in 30 years = $787.10 * 360 = $283,356

Therefore, Interest paid = $283,356 - $170,000 =  $113,356

When the loan amount = $205,000

When interest is 3% and period is 15 years:

Monthly payment = 205 * 6.91 =  $1,416.55

When interest is 3.25% and period is 20 years:

Monthly payment =205 * 5.67 =  $1,162.35

When interest is 3.5% and period is 25 years:

Monthly payment =205 * 5.01 =  $1,027.05

When interest is 3.75% and period is 30 years:

Monthly payment = 205 * 4.63 =  $949.15

Total amount paid in 30 years = $949.15 * 360 = $341,694

Interest paid = $341,694 - $205,000 = $136,694

Amount borrowed 3% 15 year $ 967.40 3.25% 20 Year 793.80 3.50% 25 Year $ 701.40 3.75% Total interest paid on 30 Year 30 year loan at 3.75% $648.20 $ 93,352 $ 140,000 $ $ 170,000 $1,174.70 $ 963.90 $ 851.70 $787.10 $ 113,356 $ 205,000 $ 1,416.55 $ 1,162.35 $1,027.05 $949.15 $ 136,694
The following is only for reference. These are the values which are used in our solution.

Annual interest rate 3.25% 3.50% Years financed 3.75% 3% 6.91 5.67 5.01 4.63