Madeoff's Mortgage. Bernie Madeoff pays $230,000 for a new four-bedroom 2,400-square-foot home outside Tonopah, Nevada. He plans to make a 20% down payment, but is having trouble deciding whether he wants a 15-year fixed rate (6.404%) or a 30-year fixed rate (6.878%) mortgage. a. What is the monthly payment for both the 15- and 30-year mortgages, assuming a fully amortizing loan of equal payments for the life of the mortgage? b. Assume that instead of making a 20% down payment, he makes a 10% down payment, and finances the remainder at 7.123% fixed interest for 15 years. What is his monthly payment? c. Assume that the home's total value falls by 25%. If Bernie sells the house at the new market value, what would be his gain or loss on the home and mortgage, assuming all of the mortgage principal remains? Use the same assumptions as in part a. a. What is the monthly payment for both the 15- and 30-year mortgages, assuming a fully amortizing loan of equal payments for the life of the mortgage?

Madeoff's Mortgage. Bernie Madeoff pays $230,000 for a new four-bedroom 2,400-square-foot home outside Tonopah, Nevada. He plans to make a 20% down payment, but is having trouble deciding whether he wants a 15-year fixed rate (6.404%) or a 30-year fixed rate (6.878%) mortgage. a. What is the monthly payment for both the 15- and 30-year mortgages, assuming a fully amortizing loan of equal payments for the life of the mortgage? b. Assume that instead of making a 20% down payment, he makes a 10% down payment, and finances the remainder at 7.123% fixed interest for 15 years. What is his monthly payment? c. Assume that the home's total value falls by 25%. If Bernie sells the house at the new market value, what would be his gain or loss on the home and mortgage, assuming all of the mortgage principal remains? Use the same assumptions as in part a. a. What is the monthly payment for both the 15- and 30-year mortgages, assuming a fully amortizing loan of equal payments for the life of the mortgage?

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter9: Obtaining Affordable Housing

Section: Chapter Questions

Problem 4DTM

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