You have decided that you want to buy a home in 6 years. You believe you can aff

Question

You have decided that you want to buy a home in 6 years. You believe you can afford a house that is $230,000.

a) If you want to have 19% for a down payment, how much will you need to have for the down payment?
Down payment = $.
DO NOT TYPE COMMAS OR ANSWERS WILL BE MARKED INCORRECT.
Round your answer to 2 decimal places as needed.

b) You decide to start investing money now so that you will have the down payment in 6 years when you are ready to purchase the home. How much should you put into a mutual fund each month if you know you can earn 7%?
Money invested each month = $.
DO NOT TYPE COMMAS OR ANSWERS WILL BE MARKED INCORRECT.
Round your answer to 2 decimal places as needed.

c) The day has finally arrived. You have saved your down payment, and are ready to purchase your $230,000 home. How much money will you be taking as a loan?
Loan amount = $.
DO NOT TYPE COMMAS OR ANSWERS WILL BE MARKED INCORRECT.
Round your answer to 2 decimal places as needed.

d) What would the monthly mortgage payment be if your loan was a 2.7% 30-year fixed mortgage?
Monthly mortgage payment = $

Explanation / Answer

a) down payment =19% of $230,000

downpayment = 0.19X $ 230,000

downpayment = $ 43,700

b) FVA =A [ ( 1+r)n -1 ] / r

$ 43,700 = A [ ( 1+0.07)6 -1 ] / 0.07

A = $ 509.10

C) Money to be taken as loan = $ 230,000- $ 43,700

Money to be taken as loan = $186,300

d)

PMT =   r/m / [ (1+r/m)mXn -1 ] X ( 1+r/m)mxn X PV

r = 0.027

m = 12 months

m = 360

PV = $186,300

PMT = 0.027/12 / [ ( 1+0.027/12)360 -1 ] X [( 1+0.027/12)360 X $ 186,300

PMT = / 1.245 X 418,404.38

PMT = $ 756.20

Monthly mortgage payment = $ 756.20

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