aul wants to purchase his own home. He currently lives
in an apartment, and his rent is being paid by his parents. Paul’s parents have informed him that they would not pay his mortgage pay- ments. Paul has no savings, but can save $400 per month. The home he desires costs $100,000, and his real estate broker informs him that a down payment of 20% would be required. If Paul can earn 8% on his savings, how long will it take him to accumulate the required down payment?
Paul will be able to save $400 per month (which can be used for mortgage payments) for the indefinite future. If Paul finances the remaining cost of the
home (after making the $20,000 down payment) at a rate of 9% over 30 years, what are his resulting monthly mortgage payments? Can he afford the mortgage?
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