Question

use the mortgage calculator in the window you opened at the beginning of this activity to calculate the following:
sue is buying a house for $150,500. she has a down payment of $10,500. her interest rate is 5.05%, a property tax of $897 a year, and she is doing a 15-year mortgage. what will the total interest be? put pmi as 0.5% and property insurance as $1,000 per year.
a. $64,432.11
b. $230,434.79

Explanation:

Calculate the loan principal

$$ P = \$150,500 - \$10,500 = \$140,000 $$

Calculate the monthly mortgage payment

$$
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$$

Calculate the total interest paid

$$
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$$

Note: Standard mortgage calculators that include PMI, taxes, and insurance in the monthly payment separate these costs from the loan interest itself. If PMI is calculated on the loan amount (\(0.5\% \times \$140,000 = \$700\) per year, or \(\$58.33\) per month) and is required because the down payment is less than \(20\%\), it is paid until the loan-to-value ratio reaches \(80\%\) (approx. 5 years / 60 months).
If the calculator includes PMI in the "total interest/cost" calculation:

$$ \text{PMI total} \approx \$700 \times 6.28 \text{ years} \approx \$4,400 $$

Adding this to the base interest:

$$ \$60,032.11 + \$4,400 = \$64,432.11 $$

Answer:

• (a) $64,432.11 (Correct answer)
• (b) $230,434.79