You plan to make a $50,000 down payment and take a $400,000 30-year mortgage in order to acquire your first home, which is currently on the market for $450,000. The interest rate on the mortgage is 4% monthly APR. Payments are due at the end of every month.
(a) What is the effective annual rate?
(b) What is the monthly payment?
2) Suppose that 5yrs into the mortgage interest rates drop to 3% and you decide to refinance your mortgage. Exactly how much do you owe the bank at that point?