Question

TREMAINE:
Wants a one-bedroom townhouse in a trendy new development downtown; the average cost is $145,000
Is preapproved for a 4.38% interest rate on a 30-year fixed mortgage
Has saved $15,000 for a down payment

If Tremaine waited until he had $30,000 saved for a down payment, how much money did he save by paying an extra $15,000 upfront? (total cost of home)

Answer 1

The amount of money he will save by paying an extra $15,000 upfront is $11,974.80.

Loan = Cost - Down payment

Loan = $145,000 - $15,000

Loan = $130,000

Given Information

P/Y= 12, C/Y=12

N= 30*12= 360

I/Y = 4.38

PV= -130,000

Monthly payment = PMT(C/Y, N, I/Y, -PV)

Monthly payment = $649.45

Total interest over the whole term = Monthly payments * Number of payments - Loan

Total interest over the whole term = $649.45*360 - $130000

Total interest over the whole term = $103,802

 

If waited to have down payment of $30,000: The Loan= $145,000 - $30,000 = $115,000

Given information

N= 30*12= 360

I/Y = 4.38

PV= -115,000

Monthly payment = PMT (N, I/Y, -PV)

Monthly payment = $574.51

Total interest over the course of the mortgage = $574.52*360 - $115,000

Total interest over the course of the mortgage = $91,827.20

Money saved by paying extra $15,000 upfront = $103,802 - $91,827.20

Money saved by paying extra $15,000 upfront = $11,974.80

Therefore, the amount of money he will save by paying an extra $15,000 upfront is $11,974.80.

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Answer 2

Answer:

$11,953

Explanation: