Suppose you close on a house and your accepted offer is $180,000. Your bank approves...
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Suppose you close on a house and your accepted offer is $180,000. Your bank approves you for a 30-year loan at 4.65% APR. You make a 10% down payment on the house and finance the rest. Use the compound interest formula given in one of my previous posts to calculate the total amount you will pay over the course of a 30-year loan. Then calculate the monthly payment which goes toward principal and interest. (Hint - calculate the number of months there are in 30 years). Also, the property tax is $1450 per year, and the homeowners' insurance premium is $845 per year. The bank includes these in your monthly payment, and these payments go into an escrow account which is used to pay taxes and the premium when they are due every year. What will be your total monthly payment (for principal and interest, taxes and insurance)? Suppose that you choose a 20-year loan at 3.9% APR. The tax and the insurance costs are the same. What will then be your total monthly payment? Which loan ends up costing more, the 20-year or the 30-year loan
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