Question

 4. A. What would be your monthly mortgage payment if you pay for a $250,000 home by making a 20% down payment and then take out a 3.74% thirty year fixed rate mortgage loan where interest is compounded monthly to cover the remaining balance. All work must be shown justifying the following answers.

 Mortgage payment =

 B. How much total interest would you have to pay over the entire life of the loan.

 Total interest paid =

 C. Suppose you inherit some money and decide to use it to pay the loan off early by paying the unpaid balance of the loan after having made the regularly scheduled 240th payment. Assuming there

 is no prepayment penalty charged, what payment will be required to pay this loan off at this time..

 Amount required to pay loan off early _______ 

 D) How much interest will you have saved by paying the loan off early after making the 240th payment?

 E. Suppose you decided to pay for this house by taking out a fifteen year 3.04% fixed rate mortgage instead of the thirty year 3.74% fixed rate mortgage. What would be your required monthly mortgage payment for this 15 year mortgage assuming you still make the same 20% down payment.

 F. How much interest would you have saved by taking out the fifteen year fixed rate mortgage instead of the thirty year fixed rate mortgage.

 Interest saved =

 G. Taking the above data into account, write a short paragraph comparing what you feel are the pros and cons of each type of mortgage.

Answer 1