A. What would be your mortgage payment if you pay for a $250,000 home by making a 20% down payment and then taking out a 3.74% thirty year fixed rate mortgage loan to cover the remaining balance. All work must be shown justifying the following answers.
B. How much total interest would you have to pay over the entire life of the loan?
C. Suppose you inherit some money and decide to use it to pay the loan off early by paying the unpaid balance of the loan after having made the regularly schedduled 240th payment. Assuming there is no prepayment penalty charged, what payment will be required to pay this loan off at this time?
D. How much interest will you have saved by paying the loan off early after making the 240th payment?
E. Suppose you decided to pay for this house by taking out a 15 year 3.04% fixed rate mortage instead of the 30 year 3.74% fixed rate mortage. What would be your required mortage payment for this 15 year mortgage assuming you still make the same 20% down payment?
F. How much interest would you have saved by taking out the fifteen year fixed rate mortgage instead of the 30 year fixed rate mortgage?
G. What are the pros and cons of each type of mortgage?