Financial Analysis

Part 1

Provided on the spreadsheet

Part 2

Down payment

Down payment is defined as the payment which is given to the lender of the real estate in order to secure the mortgages from the buyers. The high amount of down payment provides many advantages to the lender. These advantages include reduction of risk which includes low leverage decreases the risk of the bankruptcy. Secondly, in the high amount of down payment, the lender offer the high rate of interest as compare to the less amount of down payment. Thirdly, the high amount of down payment means that the buyer has to give the short amount of monthly payment. Fifthly, the high amount of down payment decreases the risk of the default or credit which in turn decrease the risk of the lender. Sixthly, the high amount of down payment reduces the cost and the expenditures of the lender. So therefore, it is said that high amount of down payment is beneficial not only for the lender but for the buyer too (Deng et. al, 1996, 263-285).

Part 3

Mortgage

Mortgages are of different types which includes the fixed rate mortgage and the adjustable rate mortgages. The fixed rate mortgage includes the mortgage with the fixed rates. The most important advantage of the fixed rate mortgage is that it includes the fixed cost of the house for the life. The various types of fixed rate mortgages are 30 years fixed rate mortgage, 15 years fixed rate mortgage and the convertible mortgage etc. while, the adjustable mortgage rate is defined as the mortgage with the lower interest rate (Dhillon et. al, 1987, 260-267).

30 Years Fixed Mortgage V/S 15 Years Adjustable Mortgage Rate

In the 30 years fixed mortgage rate, the rate of interest is fixed and high as compare to the 15 years adjustable mortgage rate. The buyer of ...