You Pay 20% Down on a Home with a Purchase

question 77

Essay

You pay 20% down on a home with a purchase price of $150,000.The bank will loan you the remaining balance at 6.84% APR.You have an option to make annual payments with a 20-year payment schedule.What is the annuity payment under the annual plan? Is this a better deal than an option to make a monthly plan of payments? Explain in terms of the effective cost of borrowing.

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Definitions:

Niche Manipulation

Niche manipulation refers to the strategic actions taken by organizations or individuals to shape or adapt their specific segment of the market to gain a competitive advantage.

Anticipatory Market Leadership

A strategic approach where a company actively predicts future market trends and customer needs to position itself as a leader in innovation and service.

Equity Financing

Raising capital through the sale of shares in a company, providing investors with ownership interests.

Ownership Shares

Portions or fractions of equity in a company, providing the shareholder certain rights, such as dividends and voting power.