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1. Summarize the results of each of your calculations. 2. Discuss the interest savings associated with an extra payment of $300 per month. 3. Discuss Private Mortgage Insurance. What is it? Why do lenders require it? What is the benefit to the borrower? 4. Compare the costs and benefits of a 10% down payment versus a 20% down payment. Dellverables 1. EXCEL Spreadsheet: a. You must use the FINANCIAL FUNCTIONS in EXCEL to calculate your answers. b. All calculations must be done in Excel. Do not calculate anything on your calculator and just enter the number into Excel (if you do this, you will not receive credit for this assignment). Do the calculation within the cell. c. You must reference cells from your base case. (Only input variables that change for each requirement.) d. Your spreadsheet should be formatted in a professional manner so it is easy to read. 2. Include a Memo that summarizes your analysis and outcomes a. The memo should be in a business memo format. b. Details on content appear at the end of this document. 3. Due data: 10/14 Submit your work to blackboard by midnight 10/14, include your name, your group member's name. Mortgage Analysis You are planning to purchase a house that costs $480,000. You plan to put 20% down and borrow the remainder. Based on your credit score, you believe that you will pay 3.25% on a 30-year mortgage. 1. Use function "PMT" to calculate your mortgage payment. 2. Use function "PV" to calculate the loan amount given a payment of $1550 per month. What is the most that you can borrow? 3. Use function "RATE" to calculate the interest rate given a payment of $1550 and a loan amount of $384,000. 4. For each scenario, calculate the total interest that you will have paid once the mortgage is paid off. (There is not a function for this, enter the formula into the cell.) 5. For each scenario, calculate the total cost of the home purchase. (Down payment plus principle (loan amount) plus interest.) 6. Assume that you plan to pay an extra $300 per month on top of your mortgage payment, calculate how long it will take you to pay off the loan given the higher payment. (Use the data from \#1). Calculate how much interest you will pay in total? Compare this to the value that you calculated for #1. You want to determine whether you should only 10% down on your house. Because you are only putting 10% down, lenders require that you purchase private mortgage insurance (PMI). Assume that PMI is 1% of the mortgage amount. Assume that you will pay PMI for 8 years in total (the assumption is that you will have 20% equity at that time so PMI will no longer be needed). 7. Calculate your total monthly payment (mortgage payment plus PMI). 8. Calculate the total cost of financing your home purchase (interest plus PMI). (remember that you only pay PMI for 8 years) 9. Calculate the totol cost of the home purchase. (Down payment plus principle (loan amount) plus interest plus PMI.) 10. Compare this to the costs associated with a 20% down payment (use data from \#1)

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