Mortgage Comparisons (Part 1): Suppose Little Jimmy is looki…
Questions
Mоrtgаge Cоmpаrisоns (Pаrt 1): Suppose Little Jimmy is looking to buy a house. He has his heart set on a house that is on the market for $223,000. Jimmy looks into his mortgage options and has found two scenarios that he thinks he could afford. Those two scenarios are outlined in the table below: Scenario I Scenario II $45,000 down payment $30,000 down payment 3.65% interest rate on mortgage 3.25% interest rate on mortgage Mortgage calculator gives a monthly payment of $814 for the 30 year loan Mortgage calculator gives a monthly payment of $839 for the 30 year loan Make sure to label and answer each of the parts below. (A) From looking ONLY at the down payments, which scenario would you expect to have a lower total cost at the end of the 30 year loan? Explain why. (B) From looking ONLY at the interest rates, which scenario would you expect to have a lower total cost at the end of 30 year loan? Explain why.