You have asked the bank for a $300,000 mortgage at the beginning of this year (January 1 of this year). They have agreed to give you this mortgage at 8% annual interest payable monthly, but with an origination fee of 0.5% and 1 mortgage discount point. What this means is that you only get $295,500.00 ($300,000 minus 1.5%). Further, suppose that you have to pay the mortgage back in 3 years and your first payment is due after one month.
What is the monthly payment? a. $8,253.83 b. $7,834.09 c. $6,534.20 d. $9,400.91
What is the effective cost of mortgage? a. 9.41% b. 8.53% c. 10.27% d. 11.11%
If you pay the mortgage according to the loan agreement, how much total interest will you pay ignoring origination fee and mortgage discount point and assume that the loan amount is $300,000? a. $35,209.35 b. $29,046.29 c. $42,325.42 d. $38,432.75 \
You can deduct the total interest paid for tax purposes. What will be the interest tax deduction for next year? a. $13,683.35 b. $14,339.82 c. $10,295.61 d. $14,256.57