Cost of the Home $ Down Payment A:% Down Payment B:% Down Payment C:% Down PaymentAmount Your equity (financial contribution to the purchase of the home) $ $ $ Initial Mortgage Required (cost of homedown payment) $ $ $ Not for the mortgage itself, but for insurance on the mortgage so be sure to use the tool providedto find the correct rate according to the regulations Mortgage Insurance RATE (if applicable) % % % Mortgage InsuranceDOLLAR AMOUNT (if applicable) $ $ $ Final

References; Best, M. C., & Kleven, H. J. (2018). Housing market responses to transaction taxes:…

Answered: Cost of the Home $ Down Payment A: %…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Discuss mortgage loans in terms of the time value of money and loan amortization. What important points should every homeowner know about how mortgages work? (Hint: Think about taxes and getting the mortgage paid off. Please explain this as simply as possible to me.
When you use a mortgage to purchase a home, the lending institution effectively owns the home. You buy back part ownership in the home with each monthly payment. The part you have bought back is your equity in the home. If the mortgage amount is P dollars, the monthly interest rate is r as a decimal, and the term of the mortgage is t months, then your equity after k payments is E(k) = P((1 + r)k − 1) (1 + r)t − 1 dollars. In this exercise, assume that the mortgage amount is $150,000, the APR is 6% so r = 0.06 12 , and the term of the loan is 30 years (360 months). (a) Find a formula for the equity. E(k) =
Before you are able to purchase a home you need to get pre-qualified and determine the maximum amount you can afford for the mortgage payment. The mortgage company that you visit uses the qualifying ratios 29/41. After speaking with the mortgage broker and answering several questions, the broker compiles this information regarding your income and expenses: You have a monthly income of $5,500. Your significant other that is living with your and will be on the loan earns $4,500 monthly. You have 2 car payments, one is $325 and the other is $280. Your significant other has a motorcycle payment of $450. You have a credit card payment of $25. Your significant other has a credit card payment of $180. The annual property tax in the area that you are considering to purchase the house has an average amount of $2800, while the average home insurance is $800 annually. Determine the anticipated monthly payment of the mortgage based on the given ratios. A) The Front-End (AKA: Housing) Ratio: ? B)…
Construct a differential equation for the changing mortgage balance. (Equation Must include r, A, P, and dA/dt)Relevant information: monthly mortgage payment (M) is composed of taxes and insurance (TI), and principle and interest (P). So, M=TI + P (TI goes into escrow account). Mortgage rate, r, is APR divided monthly (0.05/12). t is time in months, A(t) is the mortgage balance after t months of payments. the rate of change of A(t) is the difference between interest incurred and P (the portion of the monthly payment that does not go into Escrow account).
Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation. Use Exhibit 7-6, Exhibit 7-7. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) Monthly gross income $ 2,950 Other debt (monthly payment) $ 160 30-year loan at 6 percent Down payment to be made (percent of purchase price) 15 percent Monthly estimate for property taxes and insurance $ 210
PLEASE DO NOT ROUND THE ANSWERS Selling Price of Home Down Payment Rate of Interest Years $ 160,000.00 $ 20,000.00 3.50% 30 Required: Please use the above information to answer the below questions: (Use Table 15-1) How many total payments on this mortgage? What is the principal (loan)? What is the payment per $1,000? What is the monthly mortgage payment? TABLE 15.1 Amortization table (mortgage principal and interest per $1,000) Term in Years INTEREST 3½% 5% 5½% 6% 6½% 7% 7½% 8% 8½% 9% 9½% 10% 10½% 11% 10 9.89 10.61 10.86 11.11 11.36 11.62 11.88 12.14 12.40 12.67 12.94 13.22 13.50 13.78 12 8.52 9.25 9.51 9.76 10.02 10.29 10.56 10.83 11.11 11.39 11.67 11.96 12.25 12.54 15 7.15 7.91 8.18 8.44 8.72 8.99 9.28 9.56 9.85 10.15 10.45 10.75 11.06 11.37 17 6.52 7.29 7.56 7.84 8.12 8.40 8.69 8.99 9.29 9.59 9.90 10.22 10.54 10.86 20 5.80 6.60 6.88 7.17 7.46 7.76 8.06 8.37 8.68 9.00 9.33 9.66 9.99 10.33 22 5.44 6.20 6.51 6.82 7.13 7.44 7.75 8.07 8.39 8.72 9.05 9.39…
How is a home mortgage an example of Time Value of Money? What would you expect the impact of varying terms (years needed to pay off the loan) and rates to be using TVM rules? Why do homeowners sometimes refinance their mortgages?
If you are borrowing money to purchase a car, the loan agreement will likely include:Select an answer from the options below. A a collision insurance policyB payment schedule to pay the principal and interestC a mortgage on your houseD payment schedule to pay the interest
You buy a 258,000$ home with a down payment of 23%. Find the amount of the down payment and the mortgage amount. down payment=mortgaga=
First-time homeowners often use FHA loans to finance their home. Go to fha-home-loans.com and find out the current requirements to qualify for an FHA loan. They may differ slightly from that described in the book because the underwriting requirements frequently change. Summarize the types of loans that are currently available. What is the highest loan-to-value ratio that you could obtain?
Calculate how much money a prospective homeowner would need for closing costs on a house that costs $237 comma 500237,500. Calculate based on a 2121 percent down payment, 1.21.2 discount points on the loan, a 0.60.6 point origination fee, and $1 comma 8301,830 in other fees.
These problems focus on mortgages. The related text information is chapter 7 section 7-6. Examples 4, 5, 6, 7 will be helpful. Only do the one question that corresponds to your assigned number. Do not answer all of the questions. Be sure that you show all of your work to reach your answer. Each step must be on a separate line. Your method to reach your answer must be clear and include explanations. Be sure to only round at the last step for your final answer. You plan to purchase a house for $410,000 and you will make a 20% down payment. You are evaluating two mortgages a 30-year fixed mortgage at 2.87% and a 15-year fixed mortgage at 2.25%. Your goal is to have a monthly payment that fits within your budget. a. Which mortgage will give you the lowest monthly payment? What will that payment be? How much less will this be than the other monthly mortgage payment? b. Assuming you take the full term of the mortgage, which mortgage will result in you paying the most…

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