Use the Loan Amortization Excel spreadsheet to answer the following questions in the five scenarios.

1. Imagine that you are a first-time home buyer. Rather than buy a new home, you decide to purchase an existing one. You find a nice home in a good location for $163,125

You have a down payment of 20% (which is $32,625) and you decide on a 30-year fixed rate loan. This means that you need to borrow a loan amount of $130,500.

You shop around and learn that you qualify for an interest rate of 4.8%.

Your monthly (12) mortgage payments will begin next year on January 1st.

Use the loan amortization template excel sheet to answer the questions by entering the above amounts indicated in each question in cells E3-E6.

What are your scheduled monthly payments? See cell E8 in the Excel spreadsheet.

2.Look at the first payment you will make (row 13 in the excel sheet). How much of the payment goes toward interest?

3.How much total interest will you pay over the course of the loan on $130,500 at 4.8% over 30 years? See cell E10.

4.Considering total interest paid, what is the total cost of the home? To answer, add the total price of the home to the total interest paid.

5.Now, you want some cash to buy some new furniture and carpeting for your home. So, you choose to make a down payment of only 10% rather than 20%.Change the loan amortization schedule so now you borrow $147,000. Leave all other entries the same.What are your scheduled monthly payments on $147,000 at 4.8% over 30 years? See cell E8.

6.How much total interest will you pay over the course of the loan on $147,000 at 4.8% over 30 years? See cell E10.

7. Compare the total interest paid with 20% down to the total interest paid with 10% down. In 30 years, do you think the purchase of furniture and carpeting today is worth it? Use economic reasoning to answer.