**Understanding PMI and Home Equity**When purchasing a home with less than a 20% down payment, an additional monthly fee known as PMI (Private Mortgage Insurance) is required until reaching 20% equity. Monitoring equity is crucial to request PMI removal. **Case Study: Ken Buckmiller**- **Home Appraisal**: $305,000- **Mortgage Amount**: $290,000 - **Interest Rate**: 5% for 30 years- **PMI**: $279.17 per month- **Current Mortgage Balance**: $180,600**Questions**:1. **Monthly Payment (including PMI)?**2. **Has Ken reached 20% equity?****Note**: Use intermediate calculations and round all final answers to the nearest cent. For the calculation of equity, refer to Table 15.1, which provides additional details. ### Amortization Table (Mortgage Principal and Interest per $1,000)#### OverviewThis amortization table provides the monthly mortgage payment amount per $1,000 borrowed for various interest rates and loan terms. The table includes calculations for interest-only payments as well as full amortization over 10, 15, 20, 25, 30, and 40 years.#### Table Columns- **Rate**: The annual interest rate expressed as a percentage.- **Interest Only**: The monthly interest payment when paying interest only.- **10 Year, 15 Year, 20 Year, 25 Year, 30 Year, 40 Year**: The monthly payment required to fully amortize (pay off) the loan in the respective term.#### Details- **Interest Rates** range from 2.000% to 6.750%.- **Interest Only Payments** decline as the interest rate decreases, starting from 0.56250 per month for a 6.750% rate to 0.16667 for a 2.000% rate.- **Amortization Payments**: - **10 Year Term**: Monthly payments range from 9.20135 at a 2.000% rate to 11.48241 at a 6.750% rate. - **15 Year Term**: Payments range from 6.43509 to 8.84909. - **20 Year Term**: Payments range from 5.05883 to 7.60364. - **25 Year Term**: Payments range from 4.23854 to 6.90912. - **30 Year Term**: Payments range from 3.69619 to 6.48598. - **40 Year Term**: Payments range from 3.02826 to 6.03357.This table is useful for individuals looking to understand how their monthly payments will be affected by different interest rates and loan terms, allowing for a better-informed decision when selecting a mortgage plan.

If you buy a home with less than 20% down, you will pay an additional monthly fee, PMI (private mortgage insurance), until you reach 20% equity. Keep track of when you reach 20% equity so you can request to have your PMI removed. Ken Buckmiller's home recently appraised at $305,000. His mortgage was for $290,000 at 5% for 30 years with PMI of $279.17 per month. What is his monthly payment plus PMI? His mortgage balance is currently $180,600. Has he reached 20% equity? (Use Table 15.1.) Note: Round your intermediate calculations and final answer to the nearest cent. Monthly payment Has he reached 20% equity?

If you buy a home with less than 20% down, you will pay an additional monthly fee, PMI (private mortgage insurance), until you reach 20% equity. Keep track of when you reach 20% equity so you can request to have your PMI removed. Ken Buckmiller's home recently appraised at $305,000. His mortgage was for $290,000 at 5% for 30 years with PMI of $279.17 per month. What is his monthly payment plus PMI? His mortgage balance is currently $180,600. Has he reached 20% equity? (Use Table 15.1.) Note: Round your intermediate calculations and final answer to the nearest cent. Monthly payment Has he reached 20% equity?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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