My fiancé and I want to save for the down payment on the purchase of a new house in one year’s time We have met

Question

My fiancé and I want to save for the down payment on the purchase of a new house in one year’s time. We have met

with our bank, who have indicated they will lend us 97% of the purchase price of our new home, which means we require a 3 % down payment.

To save for the down payment, we plan to invest $1500 in an investment account each month for one year (starting at the end of this month). The investment account has an APR of 8% compounded monthly. At the end of the year, all of these funds will be used for a down payment.

  • calculate what we are able to save as a down payment.
  • based the first answer, what is the maximum mortgage we can secure from the Bank?
  • we have been quoted a rate of 5% for a 5-year, we have two options:

Option #1: 25 year amortization with monthly payments — Option #2: 20 year amortization with monthly payments

What are the monthly mortgage payments under option #1?

Finance