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 interest 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?