Maria takes out a 30-year fixed rate mortgage at 5% to buy a house that costs $450,000. To avoid paying mortgage insurance, she needs to put 20% of the purchase price as a down payment. (a) How much does she need for the down payment? How much money does Maria need to borrow?

Maria takes out a 30-year fixed rate mortgage at 5% to buy a house that costs $450,000. To avoid paying mortgage insurance, she needs to put 20% of the purchase price as a down payment. (a) How much does she need for the down payment? How much money does Maria need to borrow?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter8: Taxation Of Individuals

Section: Chapter Questions

Problem 38P

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Question

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Maria takes out a 30-year fixed rate mortgage at 5% to buy a house that costs $450,000. To avoid paying mortgage insurance, she needs to put 20% of the purchase price as a down payment.

(a) How much does she need for the down payment? How much money does Maria need to borrow?

Expert Solution

Step 1

Given:

Years = 30

Fixed interest rate = 5%

Cost = $450,000

Down payment = 20%

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