In this lab, we will compare 3 different loan options. Suppose that you are buying a house for $205,000. The loan is at a fixed APR of 3.5% for 30 years.

Option 2: Paying $25 extra toward your monthly payment

9. How much total interest will you pay using Option 2 of paying the extra $25 each month?

10. Calculate the total paid over the life of the loan for Option 2.

11. How much does paying that extra $25 per month save you over the life of the loan compared to (#7) in Option 1? _______________

Option 3: NO Down Payment

12. You realize that you cant afford the down payment and surprisingly find a bank that will allow you to finance the entire cost of the house ($205,000) at the same 3.5% APR.

Calculate your new monthly payment using the spreadsheet: _______________

(Change the Loan Amount and change the additional monthly PMT back to $0.)

13. Use the amortization table and record how much total interest you paid. ___________

14. Calculate the total paid over the life of the loan: __________________

15. How much more do you pay over the life of the loan by putting nothing down compared to when you put 10% down in (#7) in Option 1? _______________

16. Explain at least 2 things youve observed from making the above comparisons (down payment vs. no down payment; adding extra $25 per month to your payment). In order to receive full credit, you must use complete sentences.