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Working with numbers
Have the class find the answers to Problems A, B, and C. Then, using those problems as examples, have learners make up their own problems about monthly mortgage payments.

Problems made up by the learners might be similar to Problems A, B, and C with different amounts, or learners may want to refer to the payment chart on this page to create new problems.

Some additional problems include: What is the difference in monthly payments on an 8-percent mortgage at $35,000 and an 8-percent mortgage at $40,000? Or given the monthly payment of $563, what is the mortgage rate and what is the size of the loan?

Some learners may need assistance in reading this chart. Point out that where the loan amount and interest rate intersect is the monthly payment. The monthly payment amount is for mortgage principal and interest only. Real estate taxes and homeowners insurance are not reflected in these monthly payments.

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

Working with numbers printer

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.)

Monthly payments on a 30-year fixed mortgage

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