The Ruffins are negotiating with two banks for a mortgage to buy a house selling for $185,000. The terms at bank A are a 15%down payment, an interest rate of 10%, a 30-year conventional mortgage, and 3 points to be paid at the time of closing. Theterms at bank B are a 20% down payment, an interest rate of 10.5%, a 25-year conventional mortgage, and no points. Whichloan should the Ruffins select in order for the total cost of the house to be less?Click here for table of Monthly PaymentsFrom which bank should the Ruffins take the loan?O Bank AO Bank B

Assuming monthly payments for the two mortgages. Excel Spreadsheet:

Answered: The Ruffins are negotiating with two…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year
The Ruffins are negotiating with two banks for a mortgage to buy a house selling for $115,000. The terms at bank A are a 20% down payment, an interest rate of 10.5%, a 30-year conventional mortgage, and 3 points to be paid at the time of closing. The terms at bank B are a 15% down payment, an interest rate of 10.0%, a 25-year conventional mortgage, and no points. Which loan should the Ruffins select in order for the total cost of the house to be less?
The cost to purchase the house that Bainters are considering is $195,000, but the Bainters plan to make a $40,000 down payment. The Bainters have been approved for a fixed-rate, 30-year mortgage with a 4.2% annual interest rate for the remaining costs. They want to know how much they would pay on their loan each year as well as how much they would pay on their loan after 5 years, 10 years, 15 years, and 30 years. They also want to determine how much they would pay in interest on their loan when they repay the entire loan. What are the amounts? remember to show or explain your calculations) the total amount paid in loan payments after 1year the total amount paid in loan payments after 5years the total amount paid in loan payments after 10 years the total amount paid in loan payments after 15 years the total amount paid in loan payments after 30 years
Allen plans to purchase a house in Lindfield this year, the selling price for the house is $3.8 million. Hewants to borrow 80% of the total capital from the bank using a principal and interest loan and pay 30-yearmonthly mortgage payments. CBA bank received his loan application and provided a valuation report basedon current market conditions. However, the bank valuation is conservative, stating the market value is only$3.5 million, and to lower the risk from the bank’s side, it only approves the loan with an LVR (Loan to ValueRatio) of 70% or less.Assuming that Allen wishes to borrow as much as possible from CBA bank, how much will his monthlypayments be for such a mortgage? The current interest rate from CBA is 3.19% P.A. Ignore other costs.
The Fritzes are buying a house that sells for $196,000. The bank is requiring a minimum down payment of 20%. To obtain a 30-year mortgage at 12.0% interest, they must pay 4 points at the time of closing. a) Determine the required down payment. b) Determine the amount of the mortgage on the property with the 20% down payment. c) Find the cost of 4 points on the mortgage.
The Fritzes are buying a house that sells for $107,000.The bank is requiring a minimum down payment of 20%.To obtain a 40-year mortgage at 9.5% interest, they must pay 4 points at the time of closing. a) Determine the required down payment. b) Determine the amount of the mortgage on the property with the 20% down payment. c) Find the cost of 4 points on the mortgage. a) The required down payment is $ enter your response here.
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $175,000. Chuck can get a secured add-on interest loan from his bank at 7.45% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $4,100 per month and amortize the loan in 42 months. 1) Chuck spoke with his bank's loan officer, who has agreed to finance the deal with a 6.95% loan if Chuck can pay 20% down. What will Chuck's new monthly payment (in $) be with these conditions? (Round your answer to the nearest cent.) $ With these conditions, will Chuck be able to pay off the loan and meet his goals? Yes, under these conditions, Chuck will meet his goal.No, the monthly payment is too high. 2) Attempting to reduce his monthly payment further, Chuck continues to negotiate with the seller. If the seller agrees to reduce the listed price by $4,800, finance the deal with a 6.95% loan, and if Chuck pays the 20% down, what will Chuck's monthly payment be (in $)?…
The cost to purchase the house the Bainters are considering is $195,000 but the Bainters plan to make a $40,000 down payment. The Bainters have been approved for a fixed-rate, 30-year mortgage with a 4.2% annual interest rate for the remaining costs. What is the correct equation to determine the monthly payments of the loan?
The Joneses are interested in purchasing a house listed at $580,000 in Thunder Bay. They are prepared to make a down payment of $200,000 and the rest of the money is financed by a mortgage offered by Royal Bank. The mortgage rate is 12% (APR compounded semiannually).a. What is the effective monthly rate on this mortgage?b. If the Joneses choose an amortization period of 10 years, what will be the monthly payment on their mortgage loan?c. What is the interest portion of the 25th payment? What is the principal portion of that payment? Please answer fast I give you upvote.
The MacEacherns wish to buy a new house that costs $279,000. The bank charges 5.25% interest. A) If the MacEacherns take out a 20-year mortgage, what will their monthly payment be? B) How much total interest will the MacEacherns pay if they only paid the minimum monthly payment found int part A and paid for the entire 20 years? C) If the home insurance premium for the year will be $1,224 and they will need to pay an annual property tax amount of $2,136, what is the PITI? D) What is the finance charge for the first payment? E) How much of the first monthly payment will go toward the balance/principal? F) What is the new balance on the loan?
You are looking to buy a $415,000.00 home in Haverhill. If Bank of America will give them a 15-year mortgage at 3.25% annual interest rate for the cost of the house after they receive a 20% down payment. How much interest will they have paid?
The Mrtinezes are planning to refinanace their home (assuming that there are no additional finance charges). The outstanding balance on their original loan is $100,000. Their finance company has offerend them two options: option a: A fixed rate mortage at an interest rate of 6.5%per year compounded monthly, payable over a 25 year period in 300 equal monthly installments. option b: A fixed rate mortgage an interest rate of 6.25% per year compounded monthly, payable over a 15 year period in 180 equal montly installments. a)find the monthly payment required to amortize each of these loans over the life of the loan (round to the nearest cent) option a option b b) HOw much interst would the Martinezessave in they chose the 15 year mortgage instead of the 25 year mortgage? Use the rounded mothly payment values from part a ( round your answer to the nearest cent)

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