1. Maria takes out a 30-year fixed rate mortgage at 5% to buy a house that costs $450,000. To avoidpaying mortgage insurance, she needs to put 20% of the purchase price as a down payment.(a) How much does she need for the down payment? How much money does Maria need to borrow?(b) How much will Maria's monthly mortgage payments be?(c) How much interest will Maria pay over 30 years? What percentage of the total cost of the mortgageis the interest?(d) Maria could instead choose a 15-year fixed rate mortgage at 4.5%. Calculate her monthly paymentsand total interest paid with this option and compare these results to the answers you gave in (b).Assume she is still putting 20% down.(e) Calculate the future value of the two options below. Which option below gives her more wealth in 30years?Option 1: Get the 30-year mortgage at 5% APR. Invest the difference in the mortgage payments in astock index fund that has an average APR of 7.5%.Option 2: Get the 15-year mortgage at 4.5%. After 15 years, invest in a stock index fund that has anaverage APR of 7.5% with the money that used to go to paying the mortgage.

Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Maria takes out a 30-year fixed rate mortgage at 5% to buy a house that costs $450,000. To avoid paying mortgage insurance, she needs to put 20% of the purchase price as a down payment. (a) How much does she need for the down payment? How much money does Maria need to borrow? (b) How much will Maria's monthly mortgage payments be? (c) How much interest will Maria pay over 30 years? What percentage of the total cost of the mortgage is the interest?

Maria takes out a 30-year fixed rate mortgage at 5% to buy a house that costs $450,000. To avoid paying mortgage insurance, she needs to put 20% of the purchase price as a down payment. (a) How much does she need for the down payment? How much money does Maria need to borrow? (b) How much will Maria's monthly mortgage payments be? (c) How much interest will Maria pay over 30 years? What percentage of the total cost of the mortgage is the 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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