Shantel and Kwamie are planning to buy their first home. Although they are excited about the
prospect of being
homeowners, they are also a little frightened. A mortgage payment for the next 30 years sounds like a huge commitment.
They visited a few new developments and scanned the real estate listings of pre-owned homes, but they really have no
idea how much a mortgage payment would be on a $150,000, $175,000, or $200,000 loan. They have come to you for
1) After you explain to them that they can borrow money at different rates and for different amounts of time. Shantel and
Kwamie ask you to complete a chart indicating what the monthly mortgage payment would be under some possible
interest rates and borrowing periods. They also want to know what their total interest would be on each if they chose a
25-year loan at 5% interest. Complete the chart.
2) If Shantel and Kwamie made a down payment of $20,000 on a $175,000 home, what would be their monthly
mortgage payment assuming they finance for 25 years at 5.0%.
Note: The formula to obtain the Monthly Mortgage Payment using table at the end of this lab is:
(amount financed / $1,000) × table val
3) How much would they save on each monthly payment by making the down payment?
4) How much interest would they save over the life of the loan?