Question

The bells obtain a ​-year, ​$ conventional mortgage at a ​% rate on a house selling for ​$. their monthly mortgage​ payment, including principal and​ interest, is ​$. they also pay points at closing. ​a) determine the total amount the bells will pay for their house. ​b) how much of the cost will be interest​ (including the ​points)? ​c) how much of the first payment on the mortgage is applied to the​ principal?

A) $LoanAmount - ClosingPoints
B) $MonthlyPayment x NumberOfPayments - LoanAmount
C) $LoanAmount x InterestRate + ClosingPoints
D) $MonthlyPayment x NumberOfPayments - HouseSellingPrice

Answer 1

To determine the total amount the Bells will pay for their house, add the loan amount and the closing points. The amount of the cost that will be interest is obtained by subtracting the loan amount from the total amount paid for the house. To find out how much of the first payment on the mortgage is applied to the principal, subtract the interest portion of the payment from the total monthly payment.

Step-by-step explanation:

a) To determine the total amount the Bells will pay for their house, you need to calculate the sum of the loan amount and the closing points. The total amount the Bells will pay for their house is given by the formula:

Total Amount = Loan Amount + Closing Points

b) To calculate the amount of the cost that will be interest (including the points), you need to subtract the loan amount from the total amount paid for the house. The amount of the cost that will be interest is given by the formula:

Cost of Interest = Total Amount - Loan Amount

c) To find out how much of the first payment on the mortgage is applied to the principal, you need to subtract the interest portion of the payment from the total monthly payment. The amount applied to the principal is given by the formula:

Principal Payment = Total Monthly Payment - Interest Payment