FIN303 Mortgage Math Review
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School
St. Clair College *
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Course
FIN303
Subject
Mathematics
Date
Jan 9, 2024
Type
docx
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2
Uploaded by JudgeYakPerson968
Financial Math – Mortgage Math Review
1.
What is the loan-to-value ratio if you have a $50000 mortgage loan on a house
that has a current estimated market value of $80000?
2.
What is the maximum conventional mortgage loan that you can get on a
$200,000 house?
3.
What is the maximum conventional mortgage that you can afford if you have a
$15000 down payment?
4.
With the same down payment, what is the maximum CMHC insured mortgage
that you can afford? (Recall that CMHC will go to a maximum 95% loan-to-value
ratio.)
5.
If the CMHC fee is 3.1%, what is the added cost of the home if you take the
maximum loan possible?
6.
You can afford a $600 per month mortgage payment. You’ve looked around and
have found a 5% interest rate at the local bank, and they will allow you to have a
25 year term. You will make payments monthly. Based on this information, what
is the maximum mortgage loan you can afford? (Recall that mortgages
compound twice a year, and there will be nothing left when it is paid off.)
Financial Math – Mortgage Math Review
From CSI’s Professional Financial Planning Course:
7.
Betty Smith has found her dream home, but she considers the $225,000 cost a
little steep. Before she approaches the bank for an 8 percent 25-year mortgage,
she would like you to estimate the monthly payments so she can budget for
them. What would you estimate her monthly mortgage payments to be?
(Remember, mortgages in Canada have interest that compounds twice a year.)
a.
$1,717.23
b.
$1,725.09
c.
$1,736.59
d.
$1,851.66
8.
Your client approaches you with questions regarding a mortgage. He is interested
in buying a home and asks you what the monthly payment on a $200,000
mortgage at 8% would be if the mortgage were paid off over 25 years. You say
a.
$720.00
b.
$1,526.43
c.
$1,543.63
d.
$2,000.00
Solutions:
1.
62.5%
2.
$160,000
3.
$60,000 (but you could buy a $75,000 house with the down payment)
4.
$285,000 (but you could buy a $300,000 house with the down payment)
5.
$8,835 fee
6.
$103,162.80 (the house you can afford will be higher depending on your
down payment)
7.
a
8.
b
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