Loretta Scholten bought a home for $210,000 with a down payment of $30,000. Her rate of interest is 6% for 35 years. Calculate the total cost of interest for Loretta Scholten. (Use Table 15.1.) *****TABLE ATTACHED****** Total cost of interest:
Loretta Scholten bought a home for $210,000 with a down payment of $30,000. Her rate of interest is 6% for 35 years. Calculate the total cost of interest for Loretta Scholten. (Use Table 15.1.) *****TABLE ATTACHED****** Total cost of interest:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Loretta Scholten bought a home for $210,000 with a down payment of $30,000. Her rate of interest is 6% for 35 years. Calculate the total cost of interest for Loretta Scholten. (Use Table 15.1.)
*****TABLE ATTACHED******
Total cost of interest:
Transcribed Image Text:**Table 15-1: Amortization Table (Mortgage Principal and Interest per $1,000)**
This table shows the monthly payment amounts for different loan terms and interest rates per $1,000 of a mortgage. The table includes various interest rates ranging from 3% to 11%, and loan terms from 10 to 35 years.
### Term in Years and Corresponding Monthly Payments
- **Interest Rates (Columns):**
- The interest rates are represented in percentages across the top of the table, starting at 3% and increasing by half-percent increments up to 11%. The rates are organized as follows: 3½%, 5%, 5½%, 6%, 6½%, 7%, 7½%, 8%, 8½%, 9%, 9½%, 10%, 10½%, and 11%.
- **Terms in Years (Rows):**
- The rows indicate the term of the mortgage in years: 10, 12, 15, 17, 20, 22, 25, 30, and 35 years.
### Detailed Example for 9% Interest Rate:
- For a **10-year term**, the monthly payment is **$12.67**.
- For a **12-year term**, it's **$11.39**.
- For a **15-year term**, it's **$10.15**.
- For a **17-year term**, it's **$9.59**.
- For a **20-year term**, it's **$8.99**.
- For a **22-year term**, it's **$8.72**.
- For a **25-year term**, it's **$8.40**.
- For a **30-year term**, it's **$8.05**.
- For a **35-year term**, it's **$7.84**.
### Usage
This table is a tool for calculating the monthly payment of a mortgage loan per $1,000 borrowed. The values simplify estimating mortgage payments based on differing terms and interest rates, an essential step for financial planning in home purchasing.
The highlighted column at 9% interest rate exemplifies the payment difference as the term lengthens from 10 to 35 years, showing how extended terms reduce monthly payments but often result in more total interest paid over time.
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