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You will purchase a house . The house is worth 450,000. And you want to finance it for 30 years assuming your have outstanding credit You will put 25% of the house value. How does the payment compare to the one you calculated?

For the bank:

Bank Name

Mortgage Rate

Closing Costs

Loan Amount: Assume that you will finance 75% of the purchase of the home plus closing costs. (This means that to your loan amount (75% Value of the house + Closing Costs)

On an excel worksheet calculate the following:

Scenario Analysis

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Scenario 1

Calculate the monthly rate that will be used to pay your loan. How does this compare to the loan amount given by the bank. Is it different or is it the same?

Number of periods?

Monthly payment?

Construct a Loan Amortization Table (considering monthly payments?

How much will you have to pay in interest payments throughout the life of the loan(15 years)?

What the effective rate?

What principle amount left to pay half ways through the life of the loan (15 years)?

SCENARIO 2

• Based on Scenario 1 what happens to your effective rate monthly payments and toal interest throughout the life of the loan if a rate (APR) drops by 0.5%? and b. What happens if it increases by 0.5%?

• SCENARIO 3

• Based on Scenario 1 what happens if you pay an additional 300 per month?

• How much sooner do you finish paying your loan? in years and month?

• How much do you have on interest?

• SCENARIO 4

• How much is your monthly payment if you finance the house for 15 years? Assume additional payment = 0?

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