Discussion Board - Mortgages

School: Academy of Healing Arts Massage and Facial Skin Care           Price: $10.00 USD

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Find a home that is for sale in your area (purchase price must be at least $20,000). The house that I found costs $279,900



You will finance 80% of the purchase price. Using 5% as the interest on your 30-year fixed rate mortgage, calculate the monthly payment using the factor table from the textbook.
Calculate the payment using the same 5%, but for a 15-year mortgage.
Real estate taxes amount to 1% of the sales price and the insurance premium is .5% of the sales price per year. Calculate the total monthly PITI payment.
Present your findings to your classmates and explain how much interest you would save over the life of the loan if you used the 15-year versus the 30-year loan. Show your calculations.

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Academy of Healing Arts Massage and Facial Skin Care
Solution:The cost of the property is $279,900Requirement 1Finance Amount = $279,900 * 80% = $223920Interest Rate = 5%Period = 30 yearsAnnual Payment = 223920/15.3725 = $14566.27Requirement 2Finance Amount = $279,900 * 80% = $223920Interest Rate = 5%Period = 15 yearsAnnual Payment = 223920
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