Interest Portion (month) Principal Portion (month)

Transcription

1 Lesson 4: Spreadsheets In the previous lesson, we took a look at how to find the monthly payment, the interest, the principal, the unpaid balance, and the owner's equity in a mtgage. At this time we will produce a spreadsheet to do the same. What would you ideally want to wk toward when dealing with a mtgage? Think about which options cost less and help toward owning your home the fastest. (Circle your answer f each.) Length of Owner's Long Sht Large Small High Low High Low Increase Decrease Increase Decrease Spreadsheet Example : Casey and Evelyn bought a house from Mr. Jones f $65,000. They had a down payment of $5,000 and had to brow the rest from the bank at an interest rate of 5.5%. The mtgage is taken over 5 years. The first mtgage payment was dated March 0. Prepare a spreadsheet to find the payment, interest, principal, unpaid balance, and owner's equity f the first three months. (Ratex ) (- ) ) - (Down ) + Page of

2 Filling in the Spreadsheet ESSENTIAL MATHEMATICS 40S In this case, first we need to determine the amount of the mtgage. Since, + Down = Purchase Price We can calculate the mtgage value as, $65,000 - $5,000 = $50,000 mtgage amount Next, we can begin to fill in the Spreadsheet. Step : Determine using the amtization chart. Hint: See Lesson Trend: This number will stay constant. = table value x mtgage 000 = ($5.94 * $50 000) $000 Step : Determine the using I = Prt, where P is the previous and t is (you can divide by ). Step : Determine the by finding the difference between the and the Step 4: Determine the by subtracting the. Step 5: Determine the by adding the. Trend: This should decrease slowly. = (interest rate * previous ) = (0.055 * previous ) Trend: This should increase slowly. = payment - interest Trend: The starting amount is the mtgage and this should decrease slowly. = previous unpaid balance principal Trend: The starting amount is the down payment and this should increase slowly. Owner's = previous owner's equity + principal Page of

3 Down : $5 000 : $ Rate: 4.75% Period: 5 years ESSENTIAL MATHEMATICS 40S (Ratex ) (- ) ) - (Down ) + Remember: First Month = Previous x Rate as a decimal Page of

4 Practice Question : Molly Diaz purchases a home f $ She makes a down payment of $0 000 and takes out a fixed-rate mtgage at 5.5% f the balance of the purchase price. The mtgage is to be amtized over 0 years. a) Determine Molly s monthly mtgage payments (amtization table). b) How much interest does she pay during the first month (I = Prt)? c) How much of the principal does she pay during the first month? d) How much equity will she have after the first month? e) Calculate the amount of interest she pays during the entire 0-year amtization period. Page 4 of

5 f) Suppose Molly chooses to amtize over 5 years at 5.5%. Determine her monthly payments. How did increasing the length of the amtization affect her monthly mtgage payments? g) How much interest would she pay over the entire 5 year period? How did increasing the length of the amtization affect her overall interest paid? h) Suppose she is able to negotiate the interest rate down to 4.5%. How much will her monthly payment be? How did decreasing the interest rate affect her monthly mtgage payment (compared to part f)? i) How much interest would she pay over the entire 5 year period? How did decreasing the interest rate affect her overall interest paid (compared to part f)? Page 5 of

6 Practice Question Mary and Bob just bought a house f $ They had a down payment of $5000 and had to brow the rest from the bank at an interest rate of 7% amtized over 0 years. Their first payment will be on March. Fill in the missing infmation and the chart below. Selling Price: : Down : Rate: Period: (Ratex ) (- ) ) - (Down ) + 4 Page 6 of

7 Assignment 4 ESSENTIAL MATHEMATICS 40S The following problems may be done using the Charts:. Alvin bought a house f $85,000. He paid $0,000 down and browed the rest from the bank at a rate of 7.5% f 5 years. Prepare a schedule of mtgage payments f a period of payments. The first mtgage payment was due July. Prepare a spreadsheet to find the payment, interest, principal, unpaid balance, and owner's equity. s Chart Selling Price: Down : : Period: Rate: : (Ratex ) (- ) ) - (Down ) + Page 7 of

8 . A house was purchased f $0,000. The buyer made a down payment of $7,500 with the balance of the purchase price to be mtgaged over 0 years. The interest rate is 4.75%. a) Prepare a schedule of mtgage payments f three months. s Chart Selling Price: Down : : Period: Rate: : (Ratex ) (- ) ) - (Down ) + b) Recalculate the months in (a), (b), and (c) with a 5-year mtgage. c) Recalculate the months in (a), (b), and (c) with a 5-year mtgage. d) Recalculate the months in (a), (b), and (c) using a 0 year amtization period and a rate of 4.00% f months. e) Recalculate the months in (a), (b), and (c) using a 0 year amtization period and a rate of 5.5% f months. Page 8 of

9 s Chart b) Recalculate the months with a 5-year mtgage. ESSENTIAL MATHEMATICS 40S Selling Price: Down : : Period: Rate: : (Ratex ) (- ) ) - (Down ) + s Chart c) Recalculate the months with a 5-year mtgage. Selling Price: Down : : Period: Rate: : (Ratex ) (- ) ) - (Down ) + Page 9 of

10 s Chart d) Recalculate the months using a 0 year amtization period and a rate of 4.00%. Selling Price: Down : : Period: Rate: : (Ratex ) (- ) ) - (Down ) + s Chart e) Recalculate the months using a 0 year amtization period and a rate of 5.5%. Selling Price: Down : : Period: Rate: : (Ratex ) (- ) ) - (Down ) + Page 0 of

11 s Chart ESSENTIAL MATHEMATICS 40S Selling Price: Down : : Period: Rate: : (Ratex ) (- ) ) - (Down ) Page of