Question

Oliver Queen's sister, Thea, wants to buy a home in Charlottesville, Virginia that is currently selling for $250,000, and she wants to determine if she can afford it. A bank offers her a 30 year loan, with monthly payments based on an 8.25% interest rate compounded monthly. She is required to pay 10% down. Answer the following questions.

1.​What are her monthly payments?

2.​Can she afford it?

3.​Is that all she will have to pay each month?

4.​What additional costs are associated with the down payment?

5.​Set up the amortization schedule for the first 3 months.

6.​How can we save her money?

Answer 1

1.
$1,690.35

2.
Depends on her gross income and debts

3.
No taxes and insurance, utility, PMI (Private Mortgage Insurance) etc. are extra

4.
Points fees, origination fee, administrative costs

5.

Payment	Loan beginning balance	Payment	Interest payment	Principal payment	Loan ending balance
1	225000	$1,690.35	$1,546.88	$143.47	$2,24,856.53
2	$2,24,856.53	$1,690.35	$1,545.89	$144.46	$2,24,712.06
3	$2,24,712.06	$1,690.35	$1,544.90	$145.45	$2,24,566.61

6.

By increasing downpayment