You plan to purchase a $500,000 home with a 20% down payment. You can take out a 30-year FRM of $400,000 at an APR of 7.2%. (1) What is your monthly payment? (2) If you make regular monthly payments, how long will it take to pay off half of the loan? (i.e., reduce the principle of the loan balance to half) (3) After making regular monthly payments for 10 years, how much will be the loan balance? Assume you obtain two quotes with and without (discount) points: either 7.2% APR without point or 6% with 2.5 points.
You plan to purchase a $500,000 home with a 20% down payment. You can take out a 30-year FRM of $400,000 at an APR of 7.2%. (1) What is your monthly payment? (2) If you make regular monthly payments, how long will it take to pay off half of the loan? (i.e., reduce the principle of the loan balance to half) (3) After making regular monthly payments for 10 years, how much will be the loan balance? Assume you obtain two quotes with and without (discount) points: either 7.2% APR without point or 6% with 2.5 points.
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 14P
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You plan to purchase a $500,000 home with a 20% down payment. You can take out a 30-year FRM of $400,000 at an APR of 7.2%.
(1) What is your monthly payment?
(2) If you make regular monthly payments, how long will it take to pay off half of the loan? (i.e., reduce the principle of the loan balance to half)
(3) After making regular monthly payments for 10 years, how much will be the loan balance?
Assume you obtain two quotes with and without (discount) points: either 7.2% APR without point or 6% with 2.5 points.
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