Borrowing Money Name______________
PART A DIRECTIONS: Find a “payment calculator” online. Fill in the table below
when you figure out the estimated monthly payment for each of these scenarios.
Mortgage Payments
Amount Borrowed
5% 30 Year Fixed
6.5% 30 Year Fixed
8% 30 Year Fixed
$100,000
536.82
632.07
733.76
$140,000
751.55
884.90
1027.27
$180,000
966.28
1137.72
1320.78
$225,000
1207.85
1422.15
1650.97
6.5% - 5 Year
8.5% - 5 Year
6.5% - 4 Year
$14,000
273.93
287.23
332.01
$18,000
352.19
369.30
426.87
$22,000
430.46
451.36
521.73
$35,000
684.82
718.08
830.02
Auto Payments
Amount Borrowed
Part B Directions: Answer these questions with a sentence or two each.
1. What does it mean when a commercial talks about “5.9 percent financing?”
This refers to the interest rate the bank will charge you per annum on the balance
2. How long is the typical car loan last for? Home mortgage? What is an ARM (adjustable rate
mortgage)? What is the upside and downside of those?
3-5 years. 10-30 years. ARM stands for “adjustable rate mortgage.” They offer a
lower initial interest rate, but the payment can go up when the new rate “adjusts”.
3. Why are interest rates higher for car loans? What is the current average rate for a home
mortgage, auto loan, credit card?
Cars depreciate in value ... Homes go up in value ... And the rate of default is higher on car loans.
Rates for homes (4-6), Autos (6-10), credit card (15-20).
4. Realtors speak of “PITI,” principal + interest + taxes + insurance. What are the taxes and
insurance for when you own a home?
Taxes are paid to your county and local government. They are property taxes and can be quite
pricey. Insurance is your homeowner’s insurance. Your mortgage holder (lienholder) will
sometimes require you to pay extra each month to cover these costs. The bank then makes these
payments for you from your “escrow” account.
5. Equity is the amount of money you’ve paid on your house. What is the equity if you’ve paid
half of the principle on a $150,000 mortgage and the house is currently worth $220,000?
You own approximately $145,000 of your home. That is, if you can sell it for the full $220,000.
You still owe the bank 75,000. This is the balance of your mortgage.
What is a home equity loan?
This is a loan in which you use the equity in your home as collateral ... It is actually a nice way
to describe a SECOND MORTGAGE!
6. How much do mortgage lenders expect you to have as a down payment? For an auto loan?
Home mortgages typically range from 5%-20% down depending on the type of loan. A $200,000 loan
would require $40,000 down payment. Auto loans usually require 10% of the loan.