Unit 3 : Lesson 2: How to shop for a loan

Working with numbers

Solve the problems below. Use the Monthly Payment chart to find the answers to Problems B and C. The monthly mortgage payment includes the interest plus the principal.

Problem A

Buonlap has a mortgage of $20,000. His mortgage contract says that he must pay for two points. What is the total amount he must pay for the points?

Problem B

Tran Nguyen bought a house for $40,000. His down payment was $5,000. He needed a $35,000 mortgage. His bank gave him a $35,000 mortgage loan payable over 30 years at 8 percent interest. How much are his monthly mortgage payments?

Problem C

Andre Moreau and his wife have found a house that costs $50,000. The Moreaus want to pay $10,000 as a down payment. How much money will they need to borrow? What will their monthly mortgage payments be if the interest rate is 9 percent on a 30-year loan?
Use Problems A, B, and C as examples to make up a problem of your own about monthly mortgage payments or points. Ask a classmate to solve it.

Monthly Payments on a 30-Year Fixed-Rate Mortgage

(Monthly payments shown include principal and interest only. Real estate taxes and homeowners insurance are not included.)

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