Mortgage Find a home that is for sale in your area (purchase price must be at le

Question

Mortgage

Find a home that is for sale in your area (purchase price must be at least $20,000). Include the link that will take the class to the webpage for the home.

You will finance 80% of the purchase price. Using 5% as the interest on your 30-year fixed rate mortgage, calculate the monthly payment using the factor table from the textbook.

Calculate the payment using the same 5%, but for a 15-year mortgage.

Real estate taxes amount to 1% of the sales price and the insurance premium is .5% of the sales price per year. Calculate the total monthly PITI payment.

Present your findings to your classmates and explain how much interest you would save over the life of the loan if you used the 15-year versus the 30-year loan. Show your calculations. below is the link for the house and price

http://www.homefinder.com/NC/Winston~Salem/328-Banbury-Rd-137109596d

Explanation / Answer

Home price = $1135,000

a) Monthly payment; 1135000*80% = PMT*PVAF(5%/12,360)

= 4874.34

b) Monthly payment; 1135000*80% = PMT*PVAF(5%/12,180)

= 7180.41

c) PITI monthly payment = 7180.41 + (1135000*1.5%/12) = 8599.16

d) Interest saved if 15 year loan unsed instead of 30 year loan:

TOtal interest paid in 30 year loan = 4874.34*360 - 1135000 = 619762.40

Total interest paid in 15 year loan = 7180.41*180 - 1135000= 157473.80

Saving in interest = 619762.40 - 157473.80 = 462,288.60

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