How much would wally save in interest expense

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Wally Bee purchased a new home for $250,000 with a $40,000 down payment. He financed the remainder with a 4% mortgage for 30 years.

Problem a.) What is his monthly payment?

Problem b.) If Wally had originally planned on using a 15 year mortgage (also at 4%), how much would Wally save in interest expense compared to the 30 year mortgage?

Problem c.) Give a two month amortization schedule. (Round interest factor to 4 decimals) What is the principal reduction for month 2?

Problem d.) Wally's bank has offered to lower the 4% interest rate on his 30 year loan to 3.75% if Wally will pay 1 1/4 points. What will the points cost Wally?

Problem e.) Tedd E. Bear has an annual salary of $48,000 with no other loans outstanding. Using the 25% guideline from class and with a 20% down payment, how expensive of a home can Tedd purchase using a 4%, 30 year mortgage?

Reference no: EM132761847

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