Question

FreddieMac reports that the average rate on a 30-year fixed rate mortgage is 3.92% as of January 2012. This is down from 4.76% in January 2011 and 5.03% in January 2010. If you have a $216,000, 5%, 30-year mortgage, how much interest will you save if you refinance your loan at 3.5% for 20 years?

Joe Levi bought a home in Arlington, Texas, for $130,000. He put down 25% and obtained a mortgage for 30 years at 8%. What is the difference in interest cost if he had obtained a mortgage rate of 6%? (Do not round intermediate calculations. Round your answer to the nearest cent.) Harriet Marcus is concerned about the financing of a home. She saw a small cottage that sells for $68,000. Assuming that she puts 22% down, what will be her monthly payment and the total cost of interest over the cost of the loan for each assumption? (Do not round intermediate calculations. Round your answers to the nearest cent.) Mortgage lenders base the mortgage interest rate they offer you on your credit rating. This makes it financially critical to maintain a credit score of 700 or higher. How much more interest would you pay on a $207,000 home if you put 20% down and financed the remaining with a 30-year mortgage at 6% interest compared to a 30-year mortgage at 3.5% interest? (Use 360 days a year.Do not round intermediate calculations. Round your answer to the nearest cent.) Daniel and Jan agreed to pay $557,000 for a four-bedroom colonial home in Waltham, Massachusetts, with a $60,000 down payment. They have a 30-year mortgage at a fixed rate of 6.00%. a. How much is their monthly payment? (Do not round intermediate calculations. Round your answer to the nearest cent.)   Monthly payment $    b. After the first payment, what would be the balance of the principal? (Do not round intermediate calculations. Round your answers to the nearest cent.) Payment number Portion to—   Balance of loan outstanding     Interest      Principal 1 $       $       $

Answer 1

2.

Joe Levi

Value of home = $130,000

down payment = 25%

Mortgage Loan = $130,000 × (1 - 25%)

= $97,500.

Value of mortgage loan is $97,500.

If loan is financed at 8% interest rate for 30 year then monthly payment is calculated in excel and screen shot provided below:

If loan is financed at 8% interest rate for 30 year then monthly payment is $715.42.

Again,

If loan is financed at 6% interest rate for 30 year then monthly payment is calculated in excel and screen shot provided below:

If loan is financed at 6% interest rate for 30 year then monthly payment is $584.56.

Excess Interest payment = ($715.42 × 30 × 12) - ($584.56 × 30 × 12)

= $257,551.37 - $210,442.23

= $47,109.13

Excess Interest payment by Joe Levi is $47,109.13.