For decades, home ownership has been part of the “American Dream.” The McIntosh couple decided to choose a home close to their job locations, and the couple found a home costing $234,900. The couple has also saved 5% of this value in anticipation that their home loan would require it as a down payment (as many do require between 5% and 20% down). At the mortgage company, they learned there are loan options available to them:
15-year fixed with an APR of 2.8%
30-year fixed with an APR of 3.5%
Assuming the couple paid the down payment of 5%, how much money did the mortgage company loan them?
What would be the McIntosh’s monthly payment for each loan choice presented to them?
How much will the couple pay over the life of each loan? What percentage of the total for each would be interest?
Which option would you encourage them to choose? Support your answer with what you have discovered from this problem.
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This s an example question. I prefer a typed answer so I can plug things into my computer calculator and understand the process for my actual problem writeup