Wally Bee purchased a new home for $250,000

(1-4) Wally Bee purchased a new home for $250,000 with a $40,000 down payment. He financed the remainder with a 4% mortgage for 30 years.
QUESTION 1

What is his monthly payment?


$1089.66


$946.31


$988.32


$1002.54

QUESTION 2

If Wally had originally planned on using a 15 year mortgage (also at 4%), how much would Wally save in interest expense compared to the 30 year mortgage?


$72,658


$67,344


$81,308


$63,564

QUESTION 3

Prepare a two month amortization schedule. (Round interest factor to 4 decimals) What is the principal reduction for month 2?

Month Loan Balance Payment InterestPrincipal
0
1
2

$310.56


$351.54


$401.65


$388.21


QUESTION 4

Wally's bank has offered to lower the 4% interest rate on his 30 year loan to 3.75% if Wally will pay 1 1/4 points. What will the points cost Wally?


$1895


$2625


$3155


$3365


QUESTION 5

Tedd E. Bear has an annual salary of $48,000 with no other loans outstanding. Using the 25% guideline from class and with a 20% down payment, how expensive of a home can Tedd purchase using a 4%, 30 year mortgage?


$251,353


$268,246


$279,423


$261,825