Shayna is thinking about the best way to manage her finances over the next few years. She would like to save for a down payment on a house and for retirement. Her target date to buy a house is 4 years from now. However, she is also thinking about taking her boyfriend on an expensive cruise in a year from now to celebrate their 5-year anniversary. Shayna is currently 29 years old and wants to retire at 65 years of age.

She expects that she would spend $500,000 on the house in 4 years and that mortgage rates will be 5.7% compounded semi-annually. Her grandparents have told her they will give her $100,000 for the down payment. If she wants a larger down payment, she will have to supplement this amount. If she goes on the cruise, she will spend $10,000. If she focuses only on her retirement savings, she will save all her extra cash.

Question 1

Calculate the effective mortgage monthly interest rate.

What is the monthly mortgage payment, assuming 20% down payment and a maturity of 25 years?

Answer rating: 100% (QA)

To calculate the effective mortgage monthly interest rate we first need to calculate the nominal ann... View the full answer