Home Mortgage A couple wants to buy a house andcan afford to pay $1600 per month.a. If they can get a loan for 30 years with interest at 9%per year on the unpaid balance and make monthlypayments, how much can they pay for a house?b. What is the total amount paid over the life of theloan?c. What is the total interest paid on the loan?

Home Mortgage A couple wants to buy a house andcan afford to pay $1600 per month.a. If they can get a loan for 30 years with interest at 9%per year on the unpaid balance and make monthlypayments, how much can they pay for a house?b. What is the total amount paid over the life of theloan?c. What is the total interest paid on the loan?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

See similar textbooks

Related questions

Q: The original amount that was borrowed for your home mortgage was 175,000 dollars, to be repaid…

A: Monthly payment (EMI) is calculated by present value of annuity formula. where r is APR and n is…

Q: (a) What is Diane's current monthly mortgage payment? $ (b) What is Diane's current outstanding…

A: Mortgage loan is considered to be one of the secured loan that is used to borrow required amount by…

Q: Suppose you purchase a house using a 30-year fixed rate mortgage. The APR on the loan is 3.2% and…

A: The current price of the house is computed by computing the present worth of the house. The formula…

Q: A young couple decide to take advantage the current first-time home buyer credit and buy a new…

A: A mortgage loan is generally taken to purchase or maintain real estate. The borrower pays the lender…

Q: Barbara and Jerry can afford a mortgage payment of $1, 500 per month. If interest rates are 3.25%…

A: Mortgage payment = $1500Interest rate = 3.25%Maturity = 30 YearsTo find: Amount to borrow.

Q: gage Dr. Gupta is considering a 30-year mortgage at 6% interest. She can make payments of $3500 a…

A: The amount of mortgage one can afford depends on the time and interest rate of the money.

Q: 4. Your family recently obtained a 30-year (360-month) $500,000 4.875 percent fixed rate mortgage.…

A: Loan amount (L) = $500000 Duration (n) = 360 months r = 4.875% per annum = 0.40625% per month Let M…

Q: A couple take a 30-year home mortgage of $120,000 at 7.8% compounded monthly. They make their…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

Q: You bought a house with a $378016 mortgage that you will pay off over 26 years. Given your credit…

A: When buying big ticket items like a house we do not have the financial capability to pay for the…

Q: a. What is your annual payment on the loan? b. Construct a mortgage amortization. c. What fraction…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: 15 What is their monthly payment? Roune How much will they pay over the cour $ With this payment,…

A: To determine the monthly payments we can use the PMT function in excel. The syntax is: PMT (rate,…

Q: A family has an $80,000, 20-year loan at 8% compounded monthly. (a) Find the monthly payment and…

A: A loan represents the borrowings that are taken by an individual or corporation from a bank or any…

Q: After making payments of $901.10 for 6 years on your 30-year loan at 8.9%, you decide to sell your…

A: Monthly payment (C) = $901.10 Monthly interest rate (r) = 0.00741666666666667 (i.e. 0.089 / 12)…

Q: A couple requires a mortgage loan of $182,000. They figure they can afford $1400 a month. If they…

A: A mortgage refers to a covered loan that is taken out for the purchase of a property which itself…

Q: Loan Basics nputs Present value nterest rate/year Number of years 325,000 4.00% 30 Present Value…

A: given, loan amount (P)= $325000 r=4% m=12 n = 30

Q: You purchase a home and have a $200,000 mortgage for 20 years at 5%. Utilize an amortization…

A: Mortgage = $200,00Period = 20 yearsInterest rate = 5%

Q: A family has a $121,857, 15-year mortgage at 7.8% compounded monthly. (A) Find the monthly payment…

A: Excel Spreadsheet: Excel Workings:

Q: payment necessar se a home, a family Round the answer

A: Payment per period can be calculated using PMT function in excel.PMT(rate, nper, pv, [fv],…

Q: A young married couple decide to take advantage the current first-time home buyer credit and buy a…

A: The maximum amount that can be borrowed is the present value of annuity.

Q: A loan used for buying a home is called a mortgage. The Fortunato family is borrowing $430,000 to…

A: Given, {P} Amount = $ 430,000 {R} Interest = 3.55% ~ {T} Time period = 30 years = 30*12 = 360…

Q: after making payments of $917.10 for 6 years on your 30-year loan at 8.3%, you decide to sell your…

A: Loan payoff is the amount that is to be paid to the bank at the current date to completely relieve…

Q: In order to purchase a home, you must take out a mortgage with a total loan amount $150000. If the…

A: A mortgage is a loan that is paid off slowly and completely by paying equal installments. Each…

Q: A family has a $115,478, 15-year mortgage at 7.2% compounded monthly. (A) Find the monthly payment…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: can be replaced by a loan at an interest rate of 6% at a cost of 8% of the outstanding loan amount…

A: Loan payments: These represent payments made by the borrower to the lender for amortizing the loan…

Q: Considering the Annuity Formula: In Western countries a client who intend to buy a house apply for…

A: Islamic home financing or Ijara financing. It is an alternative to a conventional mortgage and…

Q: After making payments of $901.10 for 8 years on your 30 year loan at 8.3%, you decide to sell your…

A: The person has made a payment (PMT) of $901.10 for 96 months ( 8*12). Number of months (U) remaining…

Question

Home Mortgage A couple wants to buy a house and
can afford to pay $1600 per month.
a. If they can get a loan for 30 years with interest at 9%
per year on the unpaid balance and make monthly
payments, how much can they pay for a house?
b. What is the total amount paid over the life of the
loan?
c. What is the total interest paid on the loan?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

A. what is the Monthly Payment ? what is the total interest paid ? B. time to pay off mortgage if extra $100 is added ? total interest saved ? I will rate thakn you!
Subject: finance
A couple take a 30-year home mortgage of $120,000 at 7.8% compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1000 per month. a. Find their regular monthly payment. b. Findtheunpaidbalancewhentheybeginpayingthe$1000. c. How many payments of $1000 will it take to pay off the loan? Give the answer correct to one decimal place. d. Use your answer to part(c)to find how much interest they save by paying the loan this way.
Suppose a.home owner has an existing mortgage loan with these terms: remaining balance of Sh. 50,000, interest rate of 8% and remaining term of 10 years (monthly payments). The loan can be replaced by a loan at an interest rate of 6% at a cost of 8% of the outstanding loan amount Should the home owner refinance? What difference would it make if the home owner expecis to be in the home for only five more years?.
2. Assume Josephine purchases a home for $180,000 and has a 20% down payment. If she finances the purchase with a 30 year mortgage with a 4% interest rate……what is her monthly payment? If she pays the mortgage through the entire term with no early payment, how much interest will she pay over the life of the loan?
A family has an $80,000, 20-year loan at 8% compounded monthly. (a) Find the monthly payment and the total interest paid. (b) Suppose the family decides to add an extra $100 to its mortgage payment each month starting with the very first payment. How long will it take the family to pay off the mortgage? (c) Referring to part (i) and (ii), how much interest will the family save?
Find the monthly house payment necessary to amortize the following loan. 9) In order to purchase a home, a family borrows $121,000 at 3.0% for 30 yr. What is their monthly payment? Round the answer to the nearest cent.
Yogesh
(a) What is Diane's current monthly mortgage payment? $ (b) What is Diane's current outstanding balance? $ (c) If Diane decides to refinance her property by securing a 30-year home mortgage loan in the amount of the current outstanding principal at the prevailing interest rate of 5% per year compounded monthly, what will be her monthly mortgage payment? Use the rounded outstanding balance. (d) How much less would Diane's monthly mortgage payment be if she refinances? Use the rounded values from parts (a)-(c). %24 %24
Suppose you take out a $117,000, 20-year mortgage loan to buy a condo. The interest rate on the loan is 5%. To keep things simple, we will assume you make payments on the loan annually at the end of each year. a. What is your annual payment on the loan? b. Construct a mortgage amortization. c. What fraction of your initial loan payment is interest? d. What fraction of your initial loan payment is amortization? e. What is the total of the loan amount paid off after 10 years (halfway through the life of the loan)? f. If the inflation rate is 3%, what is the real value of the first (year-end) payment? g. If the inflation rate is 3%, what is the real value of the last (year-end) payment? h. Now assume the inflation rate is 6% and the real interest rate on the loan is unchanged. What must be the new nominal interest rate? i-1. Recompute the amortization table. i-2. What is the real value of the first (year-end) payment in this high-inflation scenario? j. What is the real value of the last…
3. A loan used for buying a home is called a mortgage. The Fortunato family is borrowing $430,000 to buy a home. They are taking out a 30-year mortgage at a rate of 3.55%. What is the monthly payment? 3. b. What is the total amount paid?
A young married couple decide to take advantage the current first-time home buyer credit and buy a new house. With their combined income, they can afford to make a maximum of $850 monthly payment. With their credit history, they can borrow a 30-year fixed rate mortgage loan at 6.8% (mortgage loans compound monthly). What's the maximum amount they can borrow?