Deb and rusty have just gotten married and wish to buy a home. they both work in boston and have a combined income of $90,000. they found a modest starter house which they are buying for $350,000.
they plan to use their $40,000 is savings to cover the closing costs the bank will charge them, which are 1% of the amount they borrow from the bank. the rest of the savings will be used as a down payment. for example, if they borrow $330,000 using $20,000 for a down payment, the closing costs will be $3,300, which still leaves them some savings. determine the largest amount they can use for a down payment and still pay the closing costs.
borrow down pmt closing costs savings left
$330,000 $20,000 $3,300 $16,700
required:
a. create a 20 year amortization schedule, giving monthly payments, for the amount they borrowed at a 5% annual interest rate.
b. compute the total amount of interest they will pay to the bank over the 20 years.