Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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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)…
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.
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
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- Can Olivia and Anthony Afford This Home Using the Monthly Income Loan Criterion? Next week, your friends Olivia and Anthony want to apply to the Fourth Global Bank for a mortgage loan. They are considering the purchase of a home that is expected to cost $125,000. Given your knowledge of personal finance, they’ve asked for your help in completing the Home Affordability Worksheet that follows. (Note: When completing the form, round each dollar amount to the nearest whole dollar.) To assist in the preparation of the worksheet, Olivia and Anthony also collected the following information: • Their financial records report a combined gross before-tax annual income of $125,000 and current (premortgage) installment loan, credit card, and car loan debt of $1,823 per month. • Their property taxes and homeowner’s insurance policy are expected to cost $3,125 per year. • Their best estimate of the interest rate on their mortgage is 7.5%, and they are interested in obtaining a 15-year loan.…arrow_forwardIf you are borrowing money to purchase a car, you should:Select an answer from the options below. A thoroughly read the loan documentsB withhold some items from the disclosureC borrow as much as you canD all of the abovearrow_forwardI need help for D, E, and G please You are a loan officer at the West Elm Savings and Loan. Mr. and Mrs. Brady are in your office to apply for a mortgage loan on a house they want to buy. The house has a market value of $170,000. Your bank requires 1/5 of the market value as a down payment. (a) What is the amount (in $) of the down payment? $ (b) What is the amount (in $) of the mortgage for which the Bradys are applying? $ (c) Your bank offers the Bradys a 30 year mortgage with a rate of 5%. At that rate, the monthly payments for principal and interest on the loan will be $5.37 for every $1,000 financed. What is the amount (in $) of the principal and interest portion of the Bradys' monthly payment? $ (d) What is the total amount (in $) of interest that will be paid over the life of the loan? $ (e) Your bank also requires that the monthly mortgage payments include property tax and homeowners insurance payments. If the property tax is $1,710 per…arrow_forward
- The web page of each bank in Turkey has a financial calculator that will prepare a loan amortization table based on your inputs. If you follow the “Auto Loan Calculator” link, you can calculate the monthly payments of your loan and this link will prepare a payment plan for your loan. Suppose that you want to buy an automobile with a bank loan. Search for different “auto loans” of different banks in Turkey and choose the most appropriate one for you. Give the name of the bank. Determine how much you want to borrow and in how many years you can pay it back with monthly payments by yourself. 1) What is the Annual Percentage Rate (APR) (Nominal rate) on this loan? What is the Effective Annual Rate (EAR)?arrow_forwardIn the Excel Payment Function file that follows, you are looking to see what your basic mortgage payment will be if you buy a home for $250,000. It will be a 30-year mortgage. The interest your bank will charge will be 7.5%. In cell C5, use the PMT function to determine what your monthly payment will be. Submit the spreadsheet in Canvas.arrow_forwardAfter examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at 8 percent compounded or from a bank at 9 percent compounded . Which alternative is more attractive?arrow_forward
- Information for mortgage of a house How would I figure out what my income would have to be to afford my monthly payment?arrow_forwardUsing the Loan calculator and the 1.9% APR offer, how much will Mollys monthly payment be? How much total interest will Molly pay using this plan and when she adds up all of her payments, how much will the car cost her using this plan?arrow_forwardAfter examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at 9% compounded weekly or from a bank at 10% compounded monthly. Which alternative is more attractive? If you can borrow funds from a finance company at 9% compounded weekly, the EAR for the loan is %arrow_forward
- Please show how to solve this using excel and the table attached. You have the following two mortgage choices listed on the table: 1. Calculate APR for each mortgage choice.arrow_forwardWe will now verify your results using an online Amortization Calculator. Return to www.bankrate.com (Links to an external site.), scroll down the home page and select Amortization Calculator (Links to an external site.) under the Mortgages heading. Enter the amount, time, and rate for the original loan to begin with and click CALCULATE. Your monthly payments will appear on the side. Click Show Amortization Schedule to see the month-to-month breakdown of your loan payments over the entire term of the loan.arrow_forwardSuppose you need to borrow $200,000 to buy a home, and you are deciding between a 15 year mortgage and a 30 year mortgage. Research a bank offering 15 year and 30 year mortgage loans and find the interest rates on those loans. Use the techniques you learned in this Module to do the following: 1. Calculate the monthly payment for a 15-year mortgage and for a 30-year mortgage. 2. Find the total amount of interest you will pay on the 15 year mortgage and on the 30 year mortgage. 3. Describe some of the factors (financial and non-financial) that can influence whether to obtain a shorter term mortgage or a longer term mortgage. 4. Which mortgage would you take, the 15 year or the 30 year? Explain your decision.arrow_forward
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