Suppose you can find a house that you want to buy. You have negotiated with the sellers
Question:
Suppose you can find a house that you want to buy. You have negotiated with the sellers and have agreed upon a price of $240,000. We are going to explore various options and how these options will impact the overall cost of the loan.
Time
15 years
If you make monthly payments with an interest rate of 3.6% for 15 years, how much will your payments be? $
How much interest did you pay over the life of the loan? $
20 years
If you make monthly payments with an interest rate of 3.6% for 20 years, how much will your payments be? $
How much interest did you pay over the life of the loan? $
30 years
If you make monthly payments with an interest rate of 3.6% for 30 years, how much will your payments be?$
How much interest did you pay over the life of the loan? $
40 years
If you make monthly payments with an interest rate of 3.6% for 40 years, how much will your payments be?$
How much interest did you pay over the life of the loan? $
Extra Payment
Now suppose you make an extra payment at the beginning of the loan. Suppose you pay an extra $1000. Treat this a down payment coming off of the original price. If you make monthly payments with an interest rate of 3.6% for 30 years, how much will your payments be? $
How much interest did you pay over the life of the loan? $ (Don't forget to include the $1000 in the amount of money you pay over the life of the loan.)
Conclusion
Let's now organize our information we found in a table. For each entry, record the interest you paid.
Base | Frequency | Rate | Time | Extra Payment | |||
30 year r = 3.6% Monthly | 30 year r = 3.6% Bi-Weekly | 30 year r = 4.6% Monthly | 30 year r = 5.6% Monthly | 15 year r = 3.6% Monthly | 20 year r = 3.6% Monthly | 40 year r = 3.6% Monthly | 30 year r = 3.6% Monthly Extra $1000 |
$ | $ | $ | $ | $ | $ | $ | $ |
What have you learned about mortgages?
A quality answer should be written in complete sentences and indicate what mortgage options have the biggest impact on the money that comes out of your pocket.