(24%) Consider a mortgage borrower who wants to buy a house at the price $280? 000. The bank offers the following mortgage:
Mortgage A: required down payment: length of the mortgage:
fixed mortgage rate: payment frequency:
25% 30 years 6% monthly.
At the end of one year, the remaining balance of mortgage A will be $207? 421.
(1) Calculate the monthly payment on mortgage A, the amount paid on the principal in the first month, and the remaining mortgage balance after the first payment.
Round up the numbers to the first digit after the decimal point.
(2) Calculate the home equity after one year if the house price has increased by 10%. Also calculate the smallest percentage decrease in the house price in the first year that will wipe out the home equity.
(3) After one year, the house price has increased by 5% and the 30-year fixed mortgage rate has decreased to 4?8%. Suppose that the homeowner is able to refinance the house with a 30-year mortgage B at the fixed new rate. After paying the refinancing fee $5000 out of the home equity, the remainder of the home equity is used as the down payment in mortgage B. Calculate the monthly payment in mortgage B.