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Summative Part 4 – Mortgages
Use the CMHC website to look up the following definitions. Write them out in your own words. If you learn any other words, add them into the table.
|Word |Definition |
|down payment | |
| | |
|mortgage | |
| | |
|amortization period | |
| | |
|open mortgage | |
|closed mortgage | |
|principal | |
|fixed interest | |
|variable interest | |
|biweekly payments | |
| | |
|term | |
| | |
|deed | |
| | |
| | |
| | |
| | |
Use the mortgage calculator to determine the following:
Mortgage Option #1:
Amount: 250,000
Amortization: 25 years
Payment Frequency: Monthly
Interest Rate 4%
|Monthly payment | |
|Length of time to pay off the mortgage | |
|Total Interest paid | |
|(you will need to add it up) | |
Mortgage Option #2:
Amount: 250,000
Amortization: 25 years
Payment Frequency: Biweekly
Interest Rate 4%
|Monthly payment | |
|Length of time to pay off the mortgage | |
|Total Interest paid | |
|(you will need to add it up) | |
Questions
1) Which Mortgage will you pay off faster?
2) Which mortgage will you pay less interest for? How much less interest will you pay?
Look at the same mortgages as before, but use 20 years amortization (not 25) to see the difference.
Mortgage Option #3:
Amount: 250,000
Amortization: 20 years
Payment Frequency: Monthly
Interest Rate 4%
|Monthly payment | |
|Length of time to pay off the mortgage | |
|Total Interest paid | |
|(you will need to add it up) | |
Mortgage Option #4:
Amount: 250,000
Amortization: 20 years
Payment Frequency: Biweekly
Interest Rate 4%
|Monthly payment | |
|Length of time to pay off the mortgage | |
|Total Interest paid | |
|(you will need to add it up) | |
Questions:
How does changing the amortization period to 20 years affect the total interest paid?
What are some advantages of a 25 year amortization?
What are some advantages of a 20 year amortization that is biweekly?
Read this article:
What are 3 ways you can reduce your total interest costs?
What are the 10 things you need to know before signing a contract? Provide a short description of each one.
There are a lot of extra costs association with buying a house.
Scroll down to ‘Figure Out the Up-front Costs” and complete a description of each one:
|Up Front Cost |Description |
|Down Payment | |
|Deposit | |
|Appraisal Fee | |
|Mortgage Loan Insurance Premium | |
|Mortgage Broker’s Fee | |
|Home Inspection Fee | |
|Survey or Certificate of Location Cost | |
|Land Registration Fee (Land Transfer Tax) | |
|Pre-paid Property Taxes and/or utility bills | |
|Property Insurance | |
|Legal Fees | |
List out the 11 other costs that you also need to consider:
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