Quiz 1 w Answers.html - N 1 You have just purchased a $500,000 house with a 25 down payment You will finance the balance using a mortgage that will be

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N 1: You have just purchased a $500,000 house with a 25% down payment. You will finance the balance using a mortgage that will be repaid in equal monthly payments over a term of 30 years. The first payment starts one month from today. The quoted fixed mortgage rate is 6% compounded monthly. What is the effective semi-annual interest rate for this mortgage? ANSWER 1: EMR = 6%/12 = 0.5%, such that ESAR = (1 + 0.005)^(6) - 1 = 3.0378%. QUESTION 2: You have just purchased a $500,000 house with a 25% down payment. You will finance the balance using a mortgage that will be repaid in equal monthly payments over a term of 25 years. The first payment starts one month from today. The effective semi-annual interest rate for this mortgage is 3%. What is the monthly mortgage payment? ANSWER 2: EMR = (1 + 0.03)^(1/6) - 1 = 0.4939%. Then: 25% * $500,000 = $375,000 = (C/0.004939)*(1 - 1/(1.004939^300)) So, C = $2,399. QUESTION 3: You have just purchased a house financed using a mortgage that will be repaid in equal payments of $2,400 per month over a term of 30 years, starting in one month from today. The effective annual interest rate for this mortgage is 6%. If you make the monthly payments as scheduled, what should be the