Exam 15: The Cost of Home Ownership

Bill's monthly payment is $1,056 per month. The principal is $100,000 at a rate of 12 1/2% for 35 years. The amount of interest for Bill's first payment is $1,011.67.

The total of all monthly payments plus the amount of the mortgage equals the total cost of interest.

Interest rates on mortgages do not vary from bank to bank.

Tom Burke buys a home in Virginia for $139,000. He puts down 30% and obtains a mortgage for 25 years at 12%. The portion of the first payment that covers interest is:

Points are to be paid off as part of the regular monthly payment.

Stu Reese has a $150,000 7 ½% mortgage. His monthly payment is $1,010.10. His first payment will reduce the principal to an outstanding balance of:

Dick Hercher bought a home in Homewood, Illinois, for $230,000. He put down 20% and obtained a mortgage for 25 years at 8%. The total interest cost of the loan is:

The major portion of the monthly payment is used to pay off the principal.

Using the table in the handbook, the total cost of interest on a home purchased for $200,000 with 30% down at 7% for 35 years is $235,732.