Your wealthy professor would like to live in a golfing community. A house is for sale in Greenbryer. The purchase price is $899,900. Assume that your professor is willing to pay the full asking price. The bank loves to make loans to professors and has given the following terms: 3.5% APR compounded quarterly, 15% down payment, a term of 5 years, monthly payments, and an amortization period of 25 years. Assume there are no other fees.
How much is the initial mortgage principal?
How much would the mortgage payments be?
Is this mortgage conventional? Why?