1. Annie Oakley is purchasing a home for $215,000. She will
finance the mortgage for 15 years and pay 5.75% interest on the
loan. She makes a down payment that is 20% of the purchase
a. Find the monthly payment, including principal and interest.
b. Calculate the total interest Annie will pay over the 15 year
period. (5 points)
c. How much more interest would Annie pay by paying for the home
in 30 years rather than 15 years? (5 points)
d. The annual taxes on Annie’s property come to $7100, and she
pays $535 for insurance each year. Find her monthly PITI payment if
she takes a 15 year loan. (5 points
Newlyweds Beau and Pamela have finally found the house that they
have been looking for and are anxious to make an offer. The 3
bedroom house is on the market for $186,100 and will require that
the couple complete some repairs such as installing a new roof and
replacing the deck in the back of the house. They estimate these
repairs at about $18,000. The house is currently assessed at
$195,000, however the real estate agent is confident that if they
make the repairs, the market value of the house would increase to
1. Beau and Pamela have saved $17,000 for the down payment on
the house. Based on the purchase price of $186,100, compute the
monthly principal and interest payment on a 30 year mortgage at
5.25%. (5 points)
2. Find the total amount of interest that Eric and Pamela will
pay over the 30 years of the mortgage.
3. In order to pay the $18,000 for the necessary repairs to the
house, the couple has a choice between two options:
A. Borrow the $18,000 from the bank at 5% interest, compounded
quarterly for 5 years.
B. Increase the mortgage amount to include the $18,000, bringing
the total amount financed to $187,100
Compute the total interest paid over the life of the loan for
each of these options.