You want to buy a $168,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan at 7% annual interest compounded monthly for the rest.
a) How much is the loan amount going to be?
b) What will your monthly payments be?
c) How much total interest do you pay?
d) Suppose you want to pay off the loan in 15 years rather than 30. What will your monthly payment be?
e) How much money in interest will you save if you finance for 15 years instead of 30 years?