Using excel and show formulas You are planning to purchase a house that costs $480,000. You plan...

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Using excel and show formulas
You are planning to purchase a house that costs $480,000. Youplan to put 20% down and borrow the remainder. Based on your creditscore, you believe that you will pay 3.99% on a 30-yearmortgage.
Base scenario (#1): Use function “PMT” to calculate yourmortgage payment.
Scenario #2: Use function “PV” to calculate the loan amountgiven a payment of $1,500 per month. What is the most that you canborrow? Based on that information, please calculate the total paid,total interest paid and house value you can afford (assuming a downpayment of 20%).
Scenario #3: Use function “RATE” to calculate the interest rategiven a payment of $1,500 and a loan amount of $400,000. Pleasealso calculate the total amount paid and total interest paidassuming a house value of $500,000 and down payment of 20%.
Scenario #4: Assume that you plan to pay an extra $300 permonth on top of your mortgage payment (vs. Scenario #1 – use thatscenario’s assumptions, not any other scenario). Calculate how longit will take you to pay off the loan given the higher payment (Usean interest rate of 3.99% and the loan amount you could borrow inScenario #1). Calculate how much interest you will pay in total?Compare this to the value that you calculated for #1.
You want to determine whether or not you should save some ofyour money and put only 10% down on your house. Since you are onlyputting 10% down, lenders require that you purchase privatemortgage insurance (PMI). Assume that the PMI payment is assessedannually as 1% of the current mortgage and that your house does notchange in value over the life of the mortgage. You will pay the PMIon a monthly basis until the PMI payments are cancelled when yourequity reaches 20% of the house value. Use the rest of your datafrom Scenario #1 (e.g., the $480,000 house value) as a basecomparison.
Calculate your total monthly payment (mortgage payment plusPMI).
Calculate the total cost of financing your home purchase(interest plus PMI).
Calculate the total cost of the home purchase; that is, thedown payment plus principal (loan amount) plus interest plusPMI.
Compare this to the costs associated with a 20% downpayment

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Transcribed Image Text

Using excel and show formulasYou are planning to purchase a house that costs $480,000. Youplan to put 20% down and borrow the remainder. Based on your creditscore, you believe that you will pay 3.99% on a 30-yearmortgage.Base scenario (#1): Use function “PMT” to calculate yourmortgage payment.Scenario #2: Use function “PV” to calculate the loan amountgiven a payment of $1,500 per month. What is the most that you canborrow? Based on that information, please calculate the total paid,total interest paid and house value you can afford (assuming a downpayment of 20%).Scenario #3: Use function “RATE” to calculate the interest rategiven a payment of $1,500 and a loan amount of $400,000. Pleasealso calculate the total amount paid and total interest paidassuming a house value of $500,000 and down payment of 20%.Scenario #4: Assume that you plan to pay an extra $300 permonth on top of your mortgage payment (vs. Scenario #1 – use thatscenario’s assumptions, not any other scenario). Calculate how longit will take you to pay off the loan given the higher payment (Usean interest rate of 3.99% and the loan amount you could borrow inScenario #1). Calculate how much interest you will pay in total?Compare this to the value that you calculated for #1.You want to determine whether or not you should save some ofyour money and put only 10% down on your house. Since you are onlyputting 10% down, lenders require that you purchase privatemortgage insurance (PMI). Assume that the PMI payment is assessedannually as 1% of the current mortgage and that your house does notchange in value over the life of the mortgage. You will pay the PMIon a monthly basis until the PMI payments are cancelled when yourequity reaches 20% of the house value. Use the rest of your datafrom Scenario #1 (e.g., the $480,000 house value) as a basecomparison.Calculate your total monthly payment (mortgage payment plusPMI).Calculate the total cost of financing your home purchase(interest plus PMI).Calculate the total cost of the home purchase; that is, thedown payment plus principal (loan amount) plus interest plusPMI.Compare this to the costs associated with a 20% downpayment