Mortgage Analvsis You are planning to purchase a house that costs $480,000. You

Question

Mortgage Analvsis You are planning to purchase a house that costs $480,000. You plan to put 20% down and borrow the remainder. Based on your credit score, you believe that you will pay 3.99% on a 30-year mortgage. 1. Use function "PMT" to calculate your mortgage payment. 2. Use function" PV" to calculate the loan amount given a payment of $1500 per month. What is 3. Use function "RATE" to calculate the interest rate given a payment of S1500 and a loan amount 4. 5. For each scenario, calculate the total cost of the home purchase. (Down payment plus principle 6. Assume that you plan to pay an extra $300 per month on top of your mortgage payment, the most that you can borrow? of $400,000. For each scenario, calculate the total interest that you will have paid once the mortgage is paid off. (There is not a function for this, enter the formula into the cell.) (loan amount) plus interest.) calculate how long it will take you to pay off the loan given the higher payment. (Use interest rate of 3.99%). Calculate how much interest you will pay in total? Compare this to the value that you calculated for #2.

Explanation / Answer

As per rules I am answering the first 4 sub-parts of this question

PV= $480000*80% = $384000

Rate = 3.99% pa = 0.3325% pm

Period = 30 years = 360 months

= $1831. 06

Maximum loan = =PV(0.3325%,360,1500)

= $314571.61

Rate = =RATE(360,1500,-400000)

= 0.1756% pm

= 2.107%

= 1831.06* 360 – 384000

= 275181.6

Case 2: Interest = 1500*360 – 314571.61

= 225428

Case 3: Interest = 1500*360 – 400000

= 140000

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