Assignment- Mortgages

1. If you purchase a house for $350,000 and place a 20% down payment on the house, how much will you mortgage payment be if you have a 30 year mortgage at a 4.25% interest rate?

2. How much is the down payment?

3. How much interest would you pay over the life of the loan (example from #1)

4. Same scenario as above, but you can afford to put an extra $250 a month in your payment to pay down the principal. How many years will it take to pay off the mortgage? (hint you need to change the PRINCIPAL amount in the cell (+250) at the end of the formula

5. How much interest would you pay over the life of the loan? .

6. Therefore, how much interest would you save by paying the extra amount of principal? (answer is #3 - #5)

7. Same as #1, you are borrowing the same amount of money, but can afford to obtain a 15 year mortgage at 3.50%. What is your payment each month?

8. How much interest will you pay over the life of the loan?

9. Again, how much interest will you save versus the original 30 year mortgage with no extra principal payment?

10. What have you learned from questions 1-9 or anything I spoke about in class?