11. You will make a down payment of 20 percent of the purchase price, or you will make a down payment of
$39,000 (0.20 x $195,000) at closing and borrow $156,000 through the mortgage.
a. If Option 2 is chosen you pay $156,000 x 0.015 = $2,340 in points and receive $153,660 at closing ($156,000 –
Option 1: $156,000 = PMT {[1 – (1/(1 + 0.0550/12)30(12))]/(0.0550/12)} => PMT = $885.75
b. If Option 1 is chosen you pay $156,000 x 0.01 = $1,560 in points and receive $154,440 at closing ($156,000 –
To determine the best option, we calculate the monthly payments for both options as follows
Option 2: $156,000 = PMT {[1 – (1/(1 + 0.0525/12)30(12))]/(0.0525/12)} => PMT = $861.438
12. You will make a down payment of 25 percent of the purchase price, or you will make a down payment of
$43,750 (0.25 x $175,000) at closing and borrow $131,250 through the mortgage.
payments for both options as follows
In exchange for $2,625 up front, Option 2 reduces your monthly mortgage payments by $17.012. The present value
b. If Option 1 is chosen you pay $131,250 x 0.02 = $2,625 in points and receive $128,625 at closing ($131,250 –
$2,625), although the mortgage principal is $131,250. If Option 2 is chosen you pay $131,250 x 0.03 = $3,937.5 in
To determine the best option, we calculate the monthly payments for both options as follows
In exchange for $1,312.50 up front, Option 2 reduces your monthly mortgage payments by $11.52. The present
13. You will make a down payment of 20 percent of the purchase price, or you will make a down payment of
$44,000 (0.20 x $220,000) at closing and borrow $176,000 through the mortgage.
a. For your mortgage: $176,000 = PMT{[1 – (1/(1 + 0.0475/12)15(12))]/(0.0475/12)}
b. Total interest paid on the mortgage is $70,416.40
Amortization Schedule
Month Principal Interest Cumulative
Principal
Cumulative
Interest
Ending
Balance
1 672.31 696.67 672.31 696.67 175,327.69
2 674.97 694.01 1,347.28 1,390.68 174,652.72
3 677.65 691.33 2,024.93 2,082.01 173,975.07
4 680.33 688.65 2,705.26 2,770.66 173,294.74
5 683.02 685.96 3,388.28 3,456.62 172,611.72
6 685.73 683.25 4,074.01 4,139.87 171,925.99
12 702.17 666.81 8,245.73 8,182.03 167,754.27
13 704.95 664.03 8,950.68 8,846.06 167,049.32
19 721.86 647.12 13,239.38 12,771.24 162,760.62
20 724.72 644.26 13,964.10 13,415.50 162,035.90
21 727.59 641.39 14,691.69 14,056.89 161,308.31
Month Principal Interest Cumulative
Principal
Cumulative
Interest
Ending
Balance
25 739.18 629.80 17,630.96 16,593.54 158,369.04
26 742.10 626.88 18,373.06 17,220.42 157,626.94
27 745.04 623.94 19,118.10 17,844.36 156,881.90
33 762.91 606.07 23,650.68 21,525.66 152,349.32
34 765.93 603.05 24,416.61 22,128.71 151,583.39
37 775.06 593.92 26,732.64 23,919.62 149,267.36
42 790.52 578.46 30,654.21 26,842.95 145,345.79
43 793.65 575.33 31,447.86 27,418.28 144,552.14
44 796.79 572.19 32,244.65 27,990.47 143,755.35
49 812.69 556.29 36,276.18 30,803.84 139,723.82
50 815.91 553.07 37,092.09 31,356.91 138,907.91
51 819.14 549.84 37,911.23 31,906.75 138,088.77
52 822.38 546.60 38,733.61 32,453.35 137,266.39
53 825.63 543.35 39,559.24 32,996.70 136,440.76
54 828.90 540.08 40,388.14 33,536.78 135,611.86
61 852.14 516.84 46,283.04 37,224.74 129,716.96
62 855.52 513.46 47,138.56 37,738.20 128,861.44
63 858.90 510.08 47,997.46 38,248.28 128,002.54
Month Principal Interest Cumulative
Principal
Cumulative
Interest
Ending
Balance
74 897.05 471.93 57,672.77 43,631.75 118,327.23
75 900.60 468.38 58,573.37 44,100.13 117,426.63
76 904.17 464.81 59,477.54 44,564.94 116,522.46
77 907.75 461.23 60,385.29 45,026.17 115,614.71
85 936.89 432.09 67,777.81 48,585.49 108,222.19
86 940.60 428.38 68,718.41 49,013.87 107,281.59
87 944.32 424.66 69,662.73 49,438.53 106,337.27
88 948.06 420.92 70,610.79 49,859.45 105,389.21
97 982.38 386.60 79,313.99 53,477.07 96,686.01
98 986.26 382.72 80,300.25 53,859.79 95,699.75
99 990.17 378.81 81,290.42 54,238.60 94,709.58
100 994.09 374.89 82,284.51 54,613.49 93,715.49
109 1,030.07 338.91 91,410.25 57,808.57 84,589.75
110 1,034.15 334.83 92,444.40 58,143.40 83,555.60
111 1,038.24 330.74 93,482.64 58,474.14 82,517.36
Month Principal Interest Cumulative
Principal
Cumulative
Interest
Ending
Balance
123 1,088.64 280.34 106,266.77 62,117.77 69,733.23
124 1,092.95 276.03 107,359.72 62,393.80 68,640.28
125 1,097.28 271.70 108,457.00 62,665.50 67,543.00
133 1,132.51 236.47 117,393.05 64,681.29 58,606.95
134 1,136.99 231.99 118,530.04 64,913.28 57,469.96
135 1,141.49 227.49 119,671.53 65,140.77 56,328.47
145 1,187.49 181.49 131,337.96 67,164.14 44,662.04
146 1,192.19 176.79 132,530.15 67,340.93 43,469.85
147 1,196.91 172.07 133,727.06 67,513.00 42,272.94
148 1,201.65 167.33 134,928.71 67,680.33 41,071.29
157 1,245.14 123.84 145,959.87 68,969.99 30,040.13
158 1,250.07 118.91 147,209.94 69,088.90 28,790.06
159 1,255.02 113.96 148,464.96 69,202.86 27,535.04
160 1,259.99 108.99 149,724.95 69,311.85 26,275.05
Month Principal Interest Cumulative
Principal
Cumulative
Interest
Ending
Balance
172 1,321.16 47.82 165,239.52 70,225.04 10,760.48
173 1,326.39 42.59 166,565.91 70,267.63 9,434.09
*The final payment has been adjusted to account for payments having been rounded to
the nearest cent.
14. You will make a down payment of 20 percent of the purchase price, or you will make a down payment of
$60,000 (0.20 x $300,000) at closing and borrow $240,000 through the mortgage.
Thus, your monthly payment is $1,835.98.
b. Total interest paid on the mortgage is $90,476.40
Month Principal Interest Cumulative
Principal
Cumulative
Interest
Ending
Balance
1 935.98 900.00 935.98 900.00 239,064.02
2 939.49 896.49 1,875.47 1,796.49 238,124.53
3 943.01 892.97 2,818.48 2,689.46 237,181.52
4 946.55 889.43 3,765.03 3,578.89 236,234.97
13 978.98 857.00 12,445.32 11,422.42 227,554.68
14 982.65 853.33 13,427.97 12,275.75 226,572.03
15 986.33 849.65 14,414.30 13,125.40 225,585.70
16 990.03 845.95 15,404.33 13,971.35 224,595.67
Month Principal Interest Cumulative
Principal
Cumulative
Interest
Ending
Balance
25 1,023.95 812.03 24,483.39 21,416.11 215,516.61
26 1,027.79 808.19 25,511.18 22,224.30 214,488.82
27 1,031.65 804.33 26,542.83 23,028.63 213,457.17
28 1,035.52 800.46 27,578.35 23,829.09 212,421.65
29 1,039.40 796.58 28,617.75 24,625.67 211,382.25
37 1,070.99 764.99 37,074.50 30,856.76 202,925.50
38 1,075.01 760.97 38,149.51 31,617.73 201,850.49
39 1,079.04 756.94 39,228.55 32,374.67 200,771.45
40 1,083.09 752.89 40,311.64 33,127.56 199,688.36
41 1,087.15 748.83 41,398.79 33,876.39 198,601.21
49 1,120.19 715.79 50,244.05 39,718.97 189,755.95
50 1,124.40 711.58 51,368.45 40,430.55 188,631.55
51 1,128.61 707.37 52,497.06 41,137.92 187,502.94
52 1,132.84 703.14 53,629.90 41,841.06 186,370.10
61 1,171.66 664.32 64,018.59 47,976.19 175,981.41
62 1,176.05 659.93 65,194.64 48,636.12 174,805.36
63 1,180.46 655.52 66,375.10 49,291.64 173,624.90
Month Principal Interest Cumulative
Principal
Cumulative
Interest
Ending
Balance
73 1,225.48 610.50 78,425.93 55,600.61 161,574.07
74 1,230.08 605.90 79,656.01 56,206.51 160,343.99
75 1,234.69 601.29 80,890.70 56,807.80 159,109.30
76 1,239.32 596.66 82,130.02 57,404.46 157,869.98
85 1,281.78 554.20 93,495.13 62,563.17 146,504.87
86 1,286.59 549.39 94,781.72 63,112.56 145,218.28
87 1,291.41 544.57 96,073.13 63,657.13 143,926.87
88 1,296.25 539.73 97,369.38 64,196.86 142,630.62
89 1,301.12 534.86 98,670.50 64,731.72 141,329.50
97 1,340.66 495.32 109,256.61 68,833.45 130,743.39
98 1,345.69 490.29 110,602.30 69,323.74 129,397.70
99 1,350.74 485.24 111,953.04 69,808.98 128,046.96
100 1,355.80 480.18 113,308.84 70,289.16 126,691.16
109 1,402.25 433.73 125,742.18 74,379.64 114,257.82
110 1,407.51 428.47 127,149.69 74,808.11 112,850.31
111 1,412.79 423.19 128,562.48 75,231.30 111,437.52
Month Principal Interest Cumulative
Principal
Cumulative
Interest
Ending
Balance
122 1,472.17 363.81 144,457.25 79,532.31 95,542.75
123 1,477.69 358.29 145,934.94 79,890.60 94,065.06
124 1,483.24 352.74 147,418.18 80,243.34 92,581.82
133 1,534.05 301.93 161,020.12 83,165.22 78,979.88
134 1,539.81 296.17 162,559.93 83,461.39 77,440.07
135 1,545.58 290.40 164,105.51 83,751.79 75,894.49
145 1,604.53 231.45 179,883.69 86,333.41 60,116.31
146 1,610.54 225.44 181,494.23 86,558.85 58,505.77
147 1,616.58 219.40 183,110.81 86,778.25 56,889.19
157 1,678.24 157.74 199,613.85 88,635.01 40,386.15
158 1,684.53 151.45 201,298.38 88,786.46 38,701.62
159 1,690.85 145.13 202,989.23 88,931.59 37,010.77
160 1,697.19 138.79 204,686.42 89,070.38 35,313.58
Month Principal Interest Cumulative
Principal
Cumulative
Interest
Ending
Balance
171 1,768.53 67.45 223,780.86 90,171.72 16,219.14
172 1,775.16 60.82 225,556.02 90,232.54 14,443.98
173 1,781.82 54.16 227,337.84 90,286.70 12,662.16
*The final payment has been adjusted to account for payments having been rounded to
the nearest cent.