A home will likely be the biggest purchase a person ever makes, along with being the most intimidating purchase. But the suitable news is most of the problems homebuyers face have a quick solution, if accomplished before trying to get a mortgage.
Also the purpose of this project is help you to overcome the imitating home buying process, definitely it will gave a chance to get familiar with the process:
- Check your credit report so you are mindful of what your current credit score is before for a loan. Credit reporting agencies must give you one free report annually.
- Try to work closely with your banker to figure out how much you can borrow and which loan exactly fits you.
- Acquire what current mortgage rates are. Bankers are there to help you understand how that translates into monthly mortgage payments and that’s the purpose of this project.
The following formula is used for figuring out a monthly home mortgage payment:
where: L=the loan amount in dollars
r = the annual interest rate expressed as decimal
t = the number of years of the loan
M = the monthly payment in dollars
You are looking to buy a $325,000 home in Haverhill. If Bank of America will give them a 30-year mortgage at 6% annual interest rate for the cost of the house after they receive a 10% down payment.
B. How much their monthly payment will be?
C. At the end of the 30-years, how much total money will you have paid to Bank of America for your home? In another word how much did the $325,000 house really cost the couple?
D. How much interest will they have paid?
E. How many of her monthly payment go toward the interest?
F. What percent increase over the cost of the home does this interest represent?