Duke was approved for a 30 year conventional loan for $250,000 at 3.65% fixed rate. He was also approved for a 15 year conventional loan for $250,000 at 3.45% fixed rate. He has $20,000 to put as a down payment. He has to pay insurance of $1400 a year and property tax of $2500 a year. Use time value of money to figure out the best options for Duke. To avoid PMI (at least 20% down) what amount would Duke have to put down if he wants to take out the full amount of the loan ($250,000)? If he looks at a house that is $150,000 how much would he pay per month with a 15 year loan? 30 year loan? If he looks at a house that is $150,000, would a 30 year loan or a 15 year loan be the best option? He plans to make mortgage payments of no more than $700 a month (this is including escrow). What price of house can he afford? How much more principal will he have to pay per month in order to pay off his house in 7 years if he does the following: $150,000 value home, 25% do
Duke was approved for a 30 year conventional loan for $250,000 at 3.65% fixed rate. He was also approved for a 15 year conventional loan for $250,000 at 3.45% fixed rate. He has $20,000 to put as a down payment. He has to pay insurance of $1400 a year and property tax of $2500 a year. Use time value of money to figure out the best options for Duke. To avoid PMI (at least 20% down) what amount would Duke have to put down if he wants to take out the full amount of the loan ($250,000)? If he looks at a house that is $150,000 how much would he pay per month with a 15 year loan? 30 year loan? If he looks at a house that is $150,000, would a 30 year loan or a 15 year loan be the best option? He plans to make mortgage payments of no more than $700 a month (this is including escrow). What price of house can he afford? How much more principal will he have to pay per month in order to pay off his house in 7 years if he does the following: $150,000 value home, 25% do
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
- Duke was approved for a 30 year conventional loan for $250,000 at 3.65% fixed rate. He was also approved for a 15 year conventional loan for $250,000 at 3.45% fixed rate. He has $20,000 to put as a down payment. He has to pay insurance of $1400 a year and property tax of $2500 a year. Use
time value of money to figure out the best options for Duke.
- To avoid PMI (at least 20% down) what amount would Duke have to put down if he wants to take out the full amount of the loan ($250,000)?
-
- If he looks at a house that is $150,000 how much would he pay per month with a 15 year loan?
- 30 year loan?
- If he looks at a house that is $150,000, would a 30 year loan or a 15 year loan be the best option?
- He plans to make mortgage payments of no more than $700 a month (this is including escrow). What price of house can he afford?
- How much more principal will he have to pay per month in order to pay off his house in 7 years if he does the following: $150,000 value home, 25% down payment, 15 year loan.
-
Expert Solution
Step 1
Monthly cash outflow refers to an amount that is paid each month for the repayment of loan amount including interest and principal by the borrower to the lender.
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