# You have decided that you want to buy a home in 6 years. You believe you can afford a house that...

## Question:

You have decided that you want to buy a home in 6 years. You believe you can afford a house that is $230,000. a) If you want to have 19% for a down payment, how much will you need to have for the down payment? Down payment =$.

DO NOT TYPE COMMAS OR ANSWERS WILL BE MARKED INCORRECT. Round your answer to 2 decimal places as needed.

b) You decide to start investing money now so that you will have the down payment in 6 years when you are ready to purchase the home. How much should you put into a mutual fund each month if you know you can earn 7%? Money invested each month = $. DO NOT TYPE COMMAS OR ANSWERS WILL BE MARKED INCORRECT. Round your answer to 2 decimal places as needed. c) The day has finally arrived. You have saved your down payment, and are ready to purchase your$230,000 home. How much money will you be taking as a loan? Loan amount = $. DO NOT TYPE COMMAS OR ANSWERS WILL BE MARKED INCORRECT. Round your answer to 2 decimal places as needed. d) What would the monthly mortgage payment be if your loan was a 2.7% 30-year fixed mortgage? Monthly mortgage payment =$

## Mortgage loans

A mortgage is a debt instrument secured by the collateral of specified real estate property that the borrower is obliged to pay back with a predetermined set of payments.

a) down payment =19% of $230,000 down payment = 0.19X$ 230,000

down payment = $43,700 b) FVA =A ( 1+r)^n -1 / r$ 43,700 = A ( 1+0.07)^6 -1 / 0.07

A = $509.10 C) Money to be taken as loan =$ 230,000- $43,700 Money to be taken as loan =$186,300

d)

PMT = r/m / (1+r/m)^mXn -1 X ( 1+r/m)^mxn X PV

r = 0.027

m = 12 months

m = 360

PV = $186,300 PMT = 0.027/12 / ( 1+0.027/12)^360 -1 X ( 1+0.027/12)^360 X$ 186,300 PMT = / 1.245 X 418,404.38 PMT = $756.20 Monthly mortgage payment =$ 756.20