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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

Jonathan Monahan is purchasing a townhouse for $120,000. The down payment is 20 % , and the balance will be financed with a 15-year fixed-rate mortgage at 9 % and 3 discount points (each point is 1 % of the amount financed). When Jonathan signed the sales contract, he put down a deposit of $10,000, which will be credited to his down payment at the time of the closing. In addition, he must pay the following expenses: loan application fee, $100; property transfer fee, $190; title insurance premium, 3 4 % of amount financed; hazard insurance premium, $420; prepaid taxes, $310; and attorney’s fees, $500.

a. Calculate the amount due from Jonathan at the closing.

b. If the seller is responsible for the broker’s commission, which is 5 1 2 % of the purchase price, $670 in other closing costs, and the existing mortgage balance of $65,000, what proceeds will the seller receive on the sale of the property?

(a)

To determine

To calculate: The amount equal to be obtained from J, To calculate the proceeeds of the seller receives at the end of the sale.

Explanation

Given Information:

The Principal amount is $120, 000, the down payment is 20 Years, the duration in which the balance amount is going to be financed 15 Years, Interest rate during this period is 9 %, Initial deposit paid by J is $100, 000, he needs to pay loan application fee $ 100, property transfer fee $190, Title insurance premium, the quantum financed, hazard insurance premium$ 420, Prepaid taxes to the amount of $310 and attorney’s fee of $500.

Calculation:

Steps Involved:

The down payment can be calculated by using the formula s given below:

Down Payment=120,000×20100=24000

The amount financed can be calculated by use of formula

(b)

To determine

To calculate: The amount equal to be obtained from J, the proceeeds of the seller receives at the end of the sale and the Principal amount is $120, 000, the down payment is 20 Years, the duration in which the balance amount is going to be financed 15 Years, Interest rate during this period is 9 %, Initial deposit paid by J is $100, 000, he needs to pay loan application fee $ 100, property transfer fee $190.

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