Question

) A house sells for $150,500 and a 5% down payment is made. A 30-year mortgage at 7.5% was obtained.

(i) Find the down payment.

(ii) Find the amount of the mortgage.

(iii) Find the monthly payment.

(iv) Find the total interest paid.

Answer #1

A house sells for $150,500 and a 5% down payment is made. A 30-year mortgage at 7.5% was obtained.

(i) The down payment is 5% of the price, so

(ii) Then the amount of the mortgage is

(iii) Over 30 years, if the loan is payed off monthly, then there will be a total of 30 x 12 = 360 payments, and the monthly interest rate is given by = 7.5/12 = 0.625% = 0.00625(in decimal form)

Now, using these, the monthly payment is given by

(iv) Now, if the monthly payment is $999.70 and there are 360 payments, so the total amount paid is

Then the total interest is found by subtracting the mortgage amount from the total amount paid, that is

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He is given the choice of two mortgages:
a) a 25-year mortgage at a rate of 7 %.
Find
(i) the monthly payment: $
(ii) the total amount of interest paid: $
b) a 15-year mortgage at a rate of 7 %.
Find
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(ii) the total amount of interest paid: $

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He is given the choice of two mortgages:
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(ii) the total amount of interest paid: $
b) a 15-year mortgage at a rate of 9 %.
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