Chap07_Comparing_Mortgages.gsheet
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BUS-121 Summer 2018
Comparing and Calculating Mortgages Assignment
Name: _____________
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Instr: F. PaianoDue: Saturday July 14
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LoanLoanLoanLoan
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#1#2#3#4
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Company
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Phone / web site
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Contact Person
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Amount of Loan
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Down Payment
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Loan Fees
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Application, credit report, appraisal fees
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Loan origination fees (a.k.a. points)
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Other fees and charges
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Total Fees:
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Fixed Rate Mortgage
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Interest rate
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Monthly payment
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Discount points
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Beginning interest rate
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Beginning monthly payment
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Discount points
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Payment cap
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Interest rate cap (per year)
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Interest rate cap (for life of loan)
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Negative amortization? (yes/no)
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Rate index used
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1) Compute the monthly payment, number of payments, and total amount paid and total interest paid over the life of the loan for the following fixed-rate mortgages:
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(Think carefully about 1d. Can you compute the monthly payment and number of payments? Can you compute the total amount and total interest? What is different about an adjustable rate loan? What happens to the rate?)
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Monthly PaymentNumber of PaymentsTotal AmountTotal Interest
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a) \$240,000, 4½%, 30-year mortgage:
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b) \$240,000, 4%, 20-year mortgage:
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c) \$240,000, 3½%, 15-year mortgage:
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d) \$240,000, 3%, 30-yr adjustable (what is different?)
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2) You are considering refinancing your existing 5½% mortgage. Your current mortgage balance is \$320,000 and you can get a 4% 30-year fixed-rate loan. How
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much lower will your new payments be after the refinance of the mortgage and how long will it take you (in months) to pay back the Closing Costs of \$4,918?
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Current mortgage payment (\$320,000 loan, 5½% rate, 30 years):
(Hint: Must use mortgage amortization table)
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New monthly payment after refinance (\$320,000 loan, 4% rate, 30 years):
(Hint: Must use mortgage amortization table)
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Savings each month:
(Hint: Current Mortgage Payment minus New Payment)
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Time (in months) to pay back closing costs:
(Hint: Closing Costs divided by Savings each Month)
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