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You have been dreaming of owning a home, and are excited to have found a...

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Accounting

You have been dreaming of owning a home, and are excited to have found a well-maintained 3 bedroom house on a lake for $338,000. You have been pre-approved for a 30-year fixed rate mortgage at 4.5% annual interest with a 20% down payment and $2,500 due at closing, but did not spend much time shopping around for a lender.

Your friend, who works for Waterstone Mortgage tells you two of their current options. The first option from Waterstone is a 30-year, 4.25% mortgage with a 15% down payment required, and $2,000 in closing costs. The second option from Waterstone is a 20-year, 4% mortgage with a 20% down payment required, and $1,5000 in closing costs.

Note that the yearly taxes on the property average $4,599, and annual homeowners insurance is $1,548. Assume you have budgeted $2,000 monthly for your adjusted monthly payment (PITI) and have saved $72,000 to cover your down payment and closing costs.

Determine which mortgage would be the best option and explain why you made your choice.

Part 2

Annual Interest Rate:

Length of Loan in years:

Down Payment Required %:

Closing Costs:

Down Payment Amount:

Total Due at Closing:

Monthly Payment (M) Principal & Interest:

Interest Paid:

Adjusted Monthly Payment (PITI):

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