Final answer:
To purchase a home at $100,000 with a 20% down payment, the buyer must pay $20,000 upfront. The remaining mortgage will be $80,000, with an additional $1,600 required at closing for 2 mortgage points. Monthly payments and total interest over 30 years would need to be calculated with a monthly principal and interest rate chart, which isn't provided here.
Step-by-step explanation:
Calculating the costs involved with purchasing a home, including down payments, mortgage points, monthly payments, and total interest paid, is an essential part of understanding the financial commitment of homeownership. Here is the step-by-step solution to the scenario provided:
- Down Payment: For a $100,000 home, a 20% down payment would be $100,000 * 0.20 = $20,000.
- Amount of the Mortgage: Subtract the down payment from the home price to find the mortgage amount, which is $100,000 - $20,000 = $80,000.
- Cost of the 2 Points: Mortgage points are extra fees paid at closing. Each point is 1% of the mortgage. For 2 points on an $80,000 mortgage, the cost is $80,000 * 0.02 = $1,600.
- Monthly Payment: To find the monthly payment, divide the mortgage amount by 1,000 to find the number of thousands of dollars in the mortgage amount. Then, multiply this value by the value from a monthly principal and interest rate chart (not provided here, but typically available from the lender or online mortgage calculators).
- Total Interest Paid: The total interest paid over 30 years can be calculated by taking the monthly payment (found in step 4), multiplying it by 360 (the number of months in 30 years), and then subtracting the original loan amount from this total.