Question

The Johnsons are buying a house that costs $210,000 and can afford a 20% down payment. If the Johnsons want the lowest

monthly payment, which loan option would you recommend?
a 30 year FHA, 3.5% down at a fixed rate of 6.25%
b. 30 year fixed, 20% down at a fixed rate of 6%
C.30 year fixed, 10% down at a fixed rate of 6%
d. 15 year fixed, 20% down at a fixed rate 5.5%

Answer 1

Option D: 15-year fixed, 20% down at a fixed rate of 5.5% would result in the lowest monthly payment for the Johnsons.

Step-by-step explanation:

Based on the options given, the loan option that would result in the lowest monthly payment for the Johnsons would be Option D: 15-year fixed, 20% down at a fixed rate of 5.5%. To determine this, we need to compare the monthly payments for each option.

1. Option A: 30-year FHA, 3.5% down at a fixed rate of 6.25%:
   Loan amount = $210,000 - (3.5% of $210,000) = $202,575
   Monthly payment = Loan amount * (rate/12) * (1 + rate/12)^(12 * years) / ((1 + rate/12)^(12 * years) - 1)
   = $202,575 * (6.25%/12) * (1 + 6.25%/12)^(12 * 30) / ((1 + 6.25%/12)^(12 * 30) - 1)
2. Option B: 30-year fixed, 20% down at a fixed rate of 6%:
   Loan amount = $210,000 - (20% of $210,000) = $168,000
   Monthly payment = $168,000 * (6%/12) * (1 + 6%/12)^(12 * 30) / ((1 + 6%/12)^(12 * 30) - 1)
3. Option C: 30-year fixed, 10% down at a fixed rate of 6%:
   Loan amount = $210,000 - (10% of $210,000) = $189,000
   Monthly payment = $189,000 * (6%/12) * (1 + 6%/12)^(12 * 30) / ((1 + 6%/12)^(12 * 30) - 1)
4. Option D: 15-year fixed, 20% down at a fixed rate of 5.5%:
   Loan amount = $210,000 - (20% of $210,000) = $168,000
   Monthly payment = $168,000 * (5.5%/12) * (1 + 5.5%/12)^(12 * 15) / ((1 + 5.5%/12)^(12 * 15) - 1)

By calculating the monthly payments for each option, it is found that Option D has the lowest monthly payment for the Johnsons.

Answer 2

b

Step-by-step explanation: