You want to buy a $230,500 home. You plan to pay 20% as a down payment, and take ou 5% for the rest. The bank requires 3 points at closing. (a) How much is the loan amount going to be? $ (b) How much are the closing costs? $ (c) What will your monthly payments be? $ (d) How much will you pay in interest over the life of the loan? $

You want to buy a $230,500 home. You plan to pay 20% as a down payment, and take ou 5% for the rest. The bank requires 3 points at closing. (a) How much is the loan amount going to be? $ (b) How much are the closing costs? $ (c) What will your monthly payments be? $ (d) How much will you pay in interest over the life of the loan? $

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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Concept explainers

Loans

A loan is a term that we are all familiar with. The processing of loans is one of the most important functions of a bank. It keeps our economy stable and facilitates the implementation of monetary policies. Let's take a look at the different forms of loans and get some answers to some common questions.

Question

You want to buy a $230,500 home. You plan to pay 20% as a down payment, and take out a 30-year loan at
5% for the rest. The bank requires 3 points at closing.
(a) How much is the loan amount going to be? $
(b) How much are the closing costs? $
(c) What will your monthly payments be? $
(d) How much will you pay in interest over the life of the loan? $

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Part 3 is wrong when figuring out monthly payments, which I'm slightly confused on figuring out how much we pay in interest compared to the loan amount.

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