Maria and John have been married for 2 years and just learned that they are pregnant.

1. They have been renting a small apartment but decide to purchase a house.

They find one that is selling for $375,000.

They decide to make a 20% down payment

They are considering 2 financing options:

**Option 1: ** a 3.4% interest 30-year mortgage:

**Option 2: ** a 2.9% interest 15-year mortgage:

**Answer the following questions showing all your work to reach each answer.**

A. Which option will result in a lower** monthly payment **if they take the full term of the mortgage?

B. Which option will result in the most **total interest **if they take the full term of the mortgage?

**Answer the questions showing all your work to reach each answer**

2. They decide to shop for furnishings for the new house. They choose items that amount to $1,600.00. The store has 2 **simple interest options** for purchasing:

Option 1: 20% down payment and financing at 6.4% **simple interes**t per year for 2 years.

Option 2: no down payment and financing at 6.5% **simple interest** for 3 years.

**Answer each of the following questions separately, showing all your work to reach each answer.**

**A.** Which option will result in smaller **total finance charge? **

B. Which option will result in the smaller **monthly payment**?

C. If they decide to defer any purchases and take a $1,600 bonus that Maria will be getting from work and invest it at 2.5% per year **simple interest**, **how long** will it need to be invested to earn $250 interest

D. If they decide to defer any purchases and invest the $1600.00 bonus at 1.5% interest **compounded every month**, how much interest will they earn in 3 years?

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