(Score for Question 1: _ of 50 points)
1. Victor earns a gross annual income of $84.482 and is buying a home for $185,500. He is making a 15% down
payment and financing the rest with a 25-year loan at 4.25% interest
Monthly Mortgage Payment Per $1000 Borrowed
Rate 15-year 20-year 25-year 30-year
loan loan loan loan
3.00% 6.906 5.546 4.742 4.216
3.25% 7.027 5.672 4.873 4.352
3.50% 7.149 5.800 5.006 4.490
3.75% 7.272 5.929 5.141 4.631
4.00% 7.397 6.060 5.278 4.774
4.25% 7.523 6.192 5.417 4.919
4.50% 7.650 6.326 5.558 5.067
4.75%
6.462 5.701 5.216
5.00% 7.908 6.600 5.846 5.368
(a) What is the mortgage amount he will borrow?
(b) Can he afford this mortgage? Justify your response.
(c) What will his monthly mortgage payment be?
(d) What will his total payment for the house be?
(e) What is the amount of interest he will pay?
Answer