Question

Mortgages (47-49)Eli is buying a townhouse that costs $276,650. He has $28,000 in savings and earns $4,475 a month. Eli would liketo spend no more than 30% of his income on his mortgage payment. Which loan option would give Eli the lowestmonthly payment? Show your work.A. 30 year FHA, 3.5% down and a fixed rate of 6.5%B. 30 year fixed, 5% down at a fixed rate of 6.25%C. 30 year fixed, 6.5% down and a fixed rate of 5.75%D. 30 year fixed, 10% down at a fixed rate of 5%

Answer 1

Cost C = $276,650

Initial quote = $28000

If Eli spends 30% of 4,475 = $1342.5 monthly

Then now calculate

3.5% down of $276,650 = $9682.75

Substract $28000- $9682.75 = 18317.25

Now find ,fixed rates

For 6.5% , interest is.

She have to pay a quote of (276,650- 9682.75)/12•30

. = $741.57

For 5% down of $276,650 = 13832.5

Eli have now $28000- $13832.5 = 14167.5

She have to pay a quote of (276,650- 13832)/30•12 = $262818/360

. = $730

Interest fixed rate 6.25%

Then find 730• ( 1+ 6.25/100)^ 30 = 4500 in 30 years

Now option C)

6.5% down = $276,650x 6.5/100 = $17982.25

Eli have now $28000 - 17982.25 = 10017.75

She have to pay a quote of (276,650 - 17982)/30•12

. = $718.52

Then find 718.52•( 1+ 5.75/100)^30 = 3844.6. in 30 years

Option D)

10% down = $276,650x10/100 = $27,665

Eli have now $28000- 27,665 = $335

She have to pay a quote of (276,650 - 27665)/30•12 =

. = $691.625

Then find now 691.625•(1+ 5/100)^30 = $2989.16 in 30 years

So ,in conclusion we have to choose the minor value of quote. In this case is

ANSWER IS

OPTION D) $2989,16