Problem:
Dr. Lee who is considering buying a house in your area, has decided to hire your services. After a brief meeting, you found out that he is 32 years old, married with two children, and employed as a professor at one of the well known universities in the country. he is looking for a house valued at less than $2,000,000 with cash reserves of $400,000 for down payment, hoping to retire his mortgage within 20 years. You found out that the current mortgage rate is 4.5%. he needs your help to find a house within his budget and prepare a mortgage schedule for interest and principal to be paid every month.
Required:
Question 1: Find a house that you think is the best for Dr. Lee and his family. Assuming the home price is $1,500,000, calculate Dr. Lee's monthly mortgage payment after subtracting the amount of his down payment (assume that he will pay 20% down on a house but the down payment should not exceed his cash reserves of ($400,000)).
Question 2: Construct an amortization table for the payments
Question 3: Explain how the amounts of interest and principal paid change over time.
Note: Provide support for your rationale.