Question

Suppose you want to purchase a home for $375,000 with a 30-year mortgage at 5.94% interest. Suppose also that you can put down 30%. What are the monthly payments? (Round your answer to the nearest cent.) What is the total amount paid for principal and interest? (Round your answer to the nearest cent.) 4 What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.) पी

Answer 1

a)
Down payment = $375,000 * 30% = $112,500

Loan amount = $375,000 - $112,500 = $262,500.

Nper = 30 * 12 = 360
FV = 262500
Rate = 5.94%/12
PV = 0

Monthly payment can be calculated by using the following excel formula:
=PMT(rate,nper,pv,fv)
=PMT(5.94%/12,-360,0,262500)
= $1,563.71

Monthly payment = $1,563.71

b)
Total amount paid = Monthly payment * Number of periods = $1,563.71 * 360 = $562,935.05

Total amount paid for Principal = $262,500
Total amount paid for interest = $562,935.05 - $262,500 = $300,435.05

c)
Nper = 15 * 12 = 180
FV = 262500
Rate = 5.94%/12
PV = 0

Monthly payment can be calculated by using the following excel formula:
=PMT(rate,nper,pv,fv)
=PMT(5.94%/12,-180,0,262500)
= $2,206.62

Monthly payment = $2,206.62

Total payment = $2,206.62 * 180 = $397,192.34

Amount saved = $562,935.05 - $397,192.34 = $165,742.71