Over the past 40 years, interest rates have varied widely. The rate for a 30-year mortgage reached a high of 14.75% in July 1984, and it reached 3.31% in November 2012. A significant impact oflower interest rates on society is that they enable more people to afford the purchase of a home. In the following exercise, we consider the purchase of a home that sells for $125,000. Assume that wecan make a down payment of $25,000, so we need to borrow $100,000. We assume that our annual income is $40,000 and that we have no other debt.If we can afford to pay a monthly amount of $683.33, determine how much we can borrow if the term is 30 years and the interest rate is at the historic high of 14.75%. (Round your answer to thenearest dollar.)$ 54911.88Can we afford the home?YesNoIf we can afford to pay a monthly amount of $683.33, determine how much we can borrow if the term is 30 years and the interest rate is 3.31%. (Round your answer to the nearest dollar.)$ 155839.18Can we afford the home now?YesNoHow much more can you afford to borrow when the 30-year mortgage rate is at 3.31% compared to 14.75%?$ 100927.3

(1): To determine the amount which we can borrow we can use the PV function in excel. The input…

Over the past 40 years, interest rates have varied widely. The rate for a 30-year mortgage reached a high of 14.75% in July 1984, and it reached 3.31% in November 2012. A significant impact of ower interest rates on society is that they enable more people to afford the purchase of a home. In the following exercise, we consider the purchase of a home that sells for $125,000. Assume that we can make a down payment of $25,000, so we need to borrow $100,000. We assume that our annual income is $40,000 and that we have no other debt. f we can afford to pay a monthly amount of $683.33, determine how much we can borrow if the term is 30 years and the interest rate is at the historic high of 14.75%. (Round your answer to the nearest dollar.) $54911.88 Can we afford the home? O Yes O No f we can afford to pay a monthly amount of $683.33, determine how much we can borrow if the term is 30 years and the interest rate is 3.31%. (Round your answer to the nearest dollar.) s 155839.18 Can we afford the home now? O Yes O No How much more can you afford to borrow when the 30-year mortgage rate is at 3.31% compared to 14.75%? s 100927.3

Over the past 40 years, interest rates have varied widely. The rate for a 30-year mortgage reached a high of 14.75% in July 1984, and it reached 3.31% in November 2012. A significant impact of ower interest rates on society is that they enable more people to afford the purchase of a home. In the following exercise, we consider the purchase of a home that sells for $125,000. Assume that we can make a down payment of $25,000, so we need to borrow $100,000. We assume that our annual income is $40,000 and that we have no other debt. f we can afford to pay a monthly amount of $683.33, determine how much we can borrow if the term is 30 years and the interest rate is at the historic high of 14.75%. (Round your answer to the nearest dollar.) $54911.88 Can we afford the home? O Yes O No f we can afford to pay a monthly amount of $683.33, determine how much we can borrow if the term is 30 years and the interest rate is 3.31%. (Round your answer to the nearest dollar.) s 155839.18 Can we afford the home now? O Yes O No How much more can you afford to borrow when the 30-year mortgage rate is at 3.31% compared to 14.75%? s 100927.3

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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Similar questions

A person purchased a $207,038 home 10 years ago by paying 10% down and signing a 30-year mortgage at 8.7% compounded monthly. Interest rates have dropped and the owner wants to refinance the unpaid balance by signing a new 30-year mortgage at 4.5% compounded monthly. How much interest will refinancing save? Money Saved: S (Round to the nearest cent as needed.)
Suppose you want to purchase a home for $525,000 with a 30-year mortgage at 4.84% interest. Suppose also that you can put down 30%. What are the monthly payments? (Round your answer to the nearest cent.) $ What is the total amount paid for principal and interest? (Round your answer to the nearest cent.) $ What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.)
Please answer with explanation. I will really upvote. Thanks
According to money.CNN.com, with mortgage rates near 35-year lows, you may be able to cut your payments sharply by refinancing your loan. To qualify for the best rates, you need a credit score of 740 or higher and usually at least 20% equity. Even if you have to settle for a higher rate, a new loan may save you money. The main consideration is whether you will live in your home long enough to offset the refinance closing costs. Your current mortgage payment is $1,658.50 per month, with a balance of $219,800. Suppose you have a chance to refinance at a certain bank with a 30-year, 5.5% mortgage. The closing costs of the loan are application fee, $80; credit report, $165; title insurance, 0.4% of the amount financed; title search, $360; and attorney's fees, $570. You plan to live in your home for at least four more years. Use the Mortgage Refinancing Worksheet to see if it makes sense to refinance your mortgage. (attached is chart) (a): What is your currently monthly mortgage (in…
15. Mortgage payments Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the beginning, and then you make monthly payments to the lender. You've decided to buy a house that is valued at $1 million. You have $300,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $700,000 mortgage, and is offering a standard 30-year mortgage at a 12% fixed nominal interest rate (called the loan's annual percentage rate or APR). Under this loan proposal, your mortgage payment will be per month. (Note: Round the final value of any interest rate in percentage form to four decimal places.) Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a…
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely.
According to money.CNN.com, with mortgage rates near 35-year lows, you may be able to cut your payments sharply by refinancing your loan. To qualify for the best rates, you need a credit score of 740 or higher and usually at least 20% equity. Even if you have to settle for a higher rate, a new loan may save you money. The main consideration is whether you will live in your home long enough to offset the refinance closing costs. Your current mortgage payment is $1,558.50 per month, with a balance of $219,800. Suppose you have a chance to refinance at a certain bank with a 30-year, 5.75% mortgage. The closing costs of the loan are application fee, $80; credit report, $165; title insurance, 0.4% of the amount financed; title search, $360; and attorney's fees, $570. You plan to live in your home for at least four more years. Use the Mortgage Refinancing Worksheet to see if it makes sense to refinance your mortgage. A guided mortgage refinancing worksheet. The first line states "Step 1.…
According to money.CNN.com, with mortgage rates near 35-year lows, you may be able to cut your payments sharply by refinancing your loan. To qualify for the best rates, you need a credit score of 740 or higher and usually at least 20% equity. Even if you have to settle for a higher rate, a new loan may save you money. The main consideration is whether you will live in your home long enough to offset the refinance closing costs. Your current mortgage payment is $1,678.50 per month, with a balance of $218,800. Suppose you have a chance to refinance at a certain bank with a 30-year, 5.75% mortgage. The closing costs of the loan are application fee, $80; credit report, $165; title insurance, 0.4% of the amount financed; title search, $360; and attorney's fees, $570. You plan to live in your home for at least four more years. Use the Mortgage Refinancing Worksheet to see if it makes sense to refinance your mortgage a) What is your currently monthly mortgage (in $)? $ (b) Using this…
Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the beginning, and then you make monthly payments to the lender. You’ve decided to buy a house that is valued at $1 million. You have $200,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $800,000 mortgage, and is offering a standard 30-year mortgage at a 9% fixed nominal interest rate (called the loan’s annual percentage rate or APR). Under this loan proposal, your mortgage payment will be per month. (Note: Round the final value of any interest rate used to four decimal places.) Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a 15-year, $800,000 loan at…
You own a home that was recently appraised for $330,000. The balance on your existing mortgage is $117,450. If your bank is willing to loan up to 70% of the appraised value, what is the potential amount (in $) of credit available on a home equity loan?
Suppose you bought a condo for $100,000 financing it with a $20,000 down payment of your own funds and an $80,000 mortgage loan from a bank. Assume that the market value of your condo has now risen to $120,000. Ignoring interest and other costs, and assuming the loan amount is still $80,000, calculate your rate of return on your asset (ROA) and your rate of return on equity (ROE).
According to money.CNN.com, with mortgage rates near 35-year lows, you may be able to cut your payments sharply by refinancing your loan. To qualify for the best rates, you need a credit score of 740 or higher and usually at least 20% equity. Even if you have to settle for a higher rate, a new loan may save you money. The main consideration is whether you will live in your home long enough to offset the refinance closing costs. Your current mortgage payment is $1,658.50 per month, with a balance of $219,800. Suppose you have a chance to refinance at a certain bank with a 30-year, 5.5% mortgage. The closing costs of the loan are application fee, $80; credit report, $165; title insurance, 0.4% of the amount financed; title search, $360; and attorney's fees, $560. You plan to live in your home for at least four more years. Use the Mortgage Refinancing Worksheet to see if it makes sense to refinance your mortgage. Using this table, what is your new monthly mortgage payment (in $) if you…

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