15 the cost of home

All mortgage payments must be paid:

None of these applies to how all mortgage payments must be paid. not weekly monthly biweekly semiannually

An amortization schedule shows:

Portion of payment broken down to interest and principal

Lizzy Clar bought a home for $160,000, putting down $30,000. The rate of interest is 7% for 25 years. The total yearly mortgage payment is:

$11,029.20 $160,000 − $30,000 = $130,000; $130,000 / $1,000 = 130; 130 × $7.07 (Table 15-1) = $919.10; $919.10 × 12 = $11,029.20.

The difference between the monthly payments on a $120,000 home at 6 1/2% and at 8% for 25 years is (use the table in the handbook):

$115.20 Explanation ($120 × $7.72) − ($120 × $6.76) = $115.20.

Stu Reese has a $150,000 7 1/2% mortgage. His monthly payment is $1,010.10. His first payment will reduce the principal to an outstanding balance of:

$149,927.40 Explanation $150,000 × 0.075 × (1/12) = $937.50; $1010.10 − $937.50 = $72.60; $150,000.00 − $72.60 = $149,927.40.

Megan Mei is charged 2 points on a $120,000 loan at the time of closing. The original price of the home before the down payment was $140,000. The points in dollars cost Megan:

$2,400 $120,000 × 0.02 = $2,400.

Joe Jay purchased a new colonial home for $260,000, putting down 20%. He decided to use Loyal Bank for his mortgage. They were offering a 6 1/2% for a 25-year mortgage. The principal after the first payment had a balance outstanding of:

$207,720.59 Explanation $260,000 × 0.8 = $208,000; $208,000 × 0.065 × 1/12 = $1,126.67; 208 × $6.76 (Table 15-1) = $1,406.08; $1,406.08 − $1,126.67 = $279.41; $208,000 − $279.41 = $207,720.59.

Bill Moore took out an $80,000 mortgage on a ski chalet. The bank charged 4 points at closing. The points in dollars cost Bill:

$3,200 $80,000 × 0.04 = $3,200.

Jill Diamond bought a home for $190,000 with a down payment of $65,000. The rate of interest was 7% for 35 years. Her monthly mortgage payment is:

$798.75 $190,000 − $65,000 = $125,000; 125 × $6.39 (Table 15-1) = $798.75.

The total cost of interest is equal to the total of all monthly payments:

Minus amount of mortgage