For the past 3 years, you have been saving $20,000 of your salary each year for a
down payment on your dream house. The house is located In a nice area and is
currently listed at $325,000. J.P. Morgan chase bank is willing to give you a 30
year loan with a fixed rate of 6%. Assuming you use the Chase loan and make
monthly payments for the entire 30 years.
a) What will be the monthly payment?
b) How much principal will be paid-off by the end of year 10?
c) How much interest will you pay during year 15?
d) If you realize that you could afford to pay $2,500 a month, all else equal, how
long would it take you to pay off the house? Approximately how much interest
would you pay over the life of the loan if your monthly payment was $2,500?
