A professional couple wishes to purchase a new home costing $750,000, make a 20 percent down payment, and finance the remaining $600,000. The rate quoted for a conventional 30-year loan is 6 percent interest with 2.725 percent in points and $ 16,159 in other closing costs.
(Round your answers to the nearest whole dollar for parts a-c. The tolerance is +/- 4.00. For parts d and e round to 4 decimal places. The tolerance is +/- 0.0001.)
a. What is the amount of the monthly payment if the points and other costs at closing are not added to the loan? $
b. What is the amount of the monthly payment if the points and other closing costs are added to the loan? $
c. If, immediately after the one hundred twentieth payment (10 years), the professional couple decides to sell the house, what will be the unpaid balance on the loan with the points and other closing costs added to it? $
d. Determine the effective annual interest rate for the loan with points and other closing costs added to it. %
e. Use the additive approach to determine the APR (see Example 3.6 ).
APR(sub) =
%,
APR(add) =
%
APR(ADD W/PT on ALL) =
%