Math Assignment - 2 Attachments

Loan Project: Buying a House

For this assignment, you will apply some formulas from week 1 study material for the situation when you take a loan from the bank to buy a house.

1. Find on internet on any Real Estate website house for sale you would like to buy. Post

 house description,

 price of the house

 picture of the house

2. Find online a current market interest rate for a 30-year fixed-rate mortgage having a down payment of 20 percent of the purchase price.

3. Compute

 the down payment (20% of the house price)

 amount financed and

 the monthly mortgage payment (M) for 30 years mortgage; use formula

where P – loan taken from bank (mortgage), i – rate per month in decimal form, N – number of payments during 30 years (N=12×30=360)

4. Suppose rules of the bank are, that in order to qualify for the loan, your monthly mortgage payment cannot exceed 30% of your monthly income.

 What should be your minimum monthly income needed to qualify for the loan?

 What is the minimum annual income needed to qualify for the loan?

5. Assuming that the mortgage is held for the full 30 years (360 payments),

 compute the total amount you will pay for this house

 how much will be interest paid for your loan?

Submit your project as an attached file.