The Young Family is purchasing a $130,000 house with a VA mortgage. The bank is offering them a 25 year mortgage with an interest rate of 9.5%. They have $20,000 invested that could be used for a down payment. Since they do not need a down payment, Mr. Young wants to keep the money invested. Mrs. Young believes that the should make a down payment of $20,000.
a. determine the total cost of the house with no down payment.
25 years x 12 months in 1 year = 300 months
300 payments x 9.5% equals 12350.00 (which 200,121 is interest)
b. determine the total cost of the house if they make a down payment of $20,000.
300 payments
I am not even sure what do do here...
c. If the youngs use the 20,000 investment will have an annual rate of return of 10% compounded quarterly. Assuming that Mr. Young is right, calculate the value of investments in 25 years.
12350 + 961.07= 13311.07
d. determine the difference of the monthly payments in parts a and b?
e. assume the difference in monthly payments part d is invested each month rate at at rate of 6% compounded monthly for 25 years. Determine the value of investment in 25 years. ???
f. would you invest or not invest the 20,000?
please help..i have no idea if i am doing it right or wrong?
Thanks
a. determine the total cost of the house with no down payment.
25 years x 12 months in 1 year = 300 months
300 payments x 9.5% equals 12350.00 (which 200,121 is interest)
b. determine the total cost of the house if they make a down payment of $20,000.
300 payments
I am not even sure what do do here...
c. If the youngs use the 20,000 investment will have an annual rate of return of 10% compounded quarterly. Assuming that Mr. Young is right, calculate the value of investments in 25 years.
12350 + 961.07= 13311.07
d. determine the difference of the monthly payments in parts a and b?
e. assume the difference in monthly payments part d is invested each month rate at at rate of 6% compounded monthly for 25 years. Determine the value of investment in 25 years. ???
f. would you invest or not invest the 20,000?
please help..i have no idea if i am doing it right or wrong?
Thanks