Kaplan MM255 unit 8 assignment

Unit 8: Instructor
Graded Assignment
Mortgages

In
this and future Instructor Graded Assignments you will be asked to use the
answers you found in the Unit 1 Assignment.

Note:
For these questions you need to cite a reliable source for information, which
means you cannot use sites like Wikipedia, Ask.com®, and Yahoo® answers. If you
do use those sites the instructor may award 0 points for your response.

The
Assignment problems must have the work shown at all times. The steps for
solving the problems must be explained. Failure to do so could result in your
submission being given a 0. If you have any
questions about how much work to show, please contact your instructor.

Assignments
must be submitted as a Microsoft Word® document and uploaded to the Dropbox for
Unit 8. Please type all answers directly in this Assignment below the question
it applies to.

All Assignments are due by Tuesday at 11:59 PM ET of the assigned Unit.

Note:
All interest rates are to be assumed to be yearly
interest rates.

For
this assignment you will need the prime interest rate, as posted in the Wall
Street Journal®.
Use the internet to
search for the current prime interest rate.
·
List the current prime
interest rate:_______________

Question 1
(15
points)
1.
Using the internet, research and find a house listing that you would not mind
living in. Any house will work, but it must be selling for more than $10,000.

a) Post a link to your house
listing. You can also cut and paste a .jpeg file of your listing.

b) You
decide to buy this house. Assuming the bank can loan you a 30-year mortgage at
the yearly interest rate of Current Prime Rate + 3%, how much are your monthly
payments (show all calcuations?)

c) If you
were to borrow the money instead for 15 years (at the same interest rate as in
part b), how much are your mothly payments?

Question 2
(5 points)
2.
Using the house listing you found in Question 2, as well as your calculated
monthly payments in Question 2, how much do you pay in interest over the life
of the 30-year loan?

Question 3
(10
points)
3.
You find a great deal for your house! The bank agrees to give you a 5 year loan
where you only pay $100 a month, and at 0% interest. What can go wrong?
However, when 5 years pass you realize you agreed to a balloon mortgage, and
all the rest of that loan is due right now. How much do you need to pay for
your final (60th) payment? Explain how you got your answer and your reasoning
behind it.

Essay
(15
points)
4.
Mortgages come in many different types. There are fixed rate mortgages, ARM
mortgages, and balloon mortgages to name a few.

Research
fixed rate, ARM mortgages and balloon mortgages, then write an essay comparing
them. What are some of the advantages and disadvantages of each? When might you
find one type of mortgage loan beneficial over the other two?

Requirements for
essay
·
Write
your essay in this document – do not save it in a separate file.
·
You must
clearly state your position with well-structured paragraphs using proper
grammar, spelling, and sentence structure.
·
This is
not an “opinion” question – you must offer evidence to support your position,
using properly-cited sources
·
Your
answer must be between ¾-1 page in length.
·
You must
cite and reference at least one source (book, website, periodical) using APA
format.
·
Do not
use unreliable sources such as Wikipedia, and Yahoo! Answers.
You
may submit your Assignments to the Math Center for review. Tutors will not
grade or correct the Assignment, but they will provide guidance for
improvement. Tutors will not, however, help you find web sites for the Assignment.