My fiancé and I want to save for the down payment on the purchase of a new house in one year’s time. We have met
with our bank, who have indicated they will lend us 97% of the purchase price of our new home, which means we require a 3 % down payment.
To save for the down payment, we plan to invest $1500 in an investment account each month for one year (starting at the end of this month). The investment account has an APR of 8% compounded monthly. At the end of the year, all of these funds will be used for a down payment.
- calculate what we are able to save as a down payment.
- based the first answer, what is the maximum mortgage we can secure from the Bank?
- we have been quoted a rate of 5% for a 5-year, we have two options:
Option #1: 25 year amortization with monthly payments —> Option #2: 20 year amortization with monthly payments
What are the monthly mortgage payments under option #1?