Question

The price of a

home is $224,000. The bank requires a 20% down payment and three points at the time of closing. The cost of the home is financed with a 30-year fixed-rate mortgage at 7%. Complete parts (a) through (e) below.

Answer 1

(a) 20% of $224,000 is $44,800.

(b) 3 points on a $224,000 mortgage is $6,720.

(c) $44,800 + $6,720 is $51,520. So the total down payment and closing costs are $51,520.

(d) The mortgage amount is $224,000 - $51,520 = $172,480.

(e)

Monthly payment = $172,480 * (7%/12%)(30 years) = $1,234.15

Total interest paid over 30 years = $172,480 * 7% * 30 years = $243,720