Problem 6-68 Calculating Interest Rates (LO2)You are buying a house and will borrow $190,000 on a 30-year fixed rate mortgage with monthly payments to finance thepurchase. Your loan officer has offered you a mortgage with an APR of 4.25%. Alternatively, she tells you that you can "buydown" the interest rate to 4.02% if you pay points up front on the loan. A point on a loan is 1% (one percentage point) of theloan value. How many points, at most, would you be willing to pay to buy down the interest rate? (Do not roundintermediate calculations and round your answer to 3 decimal places, e.g., 32.164.)Maximimum points

The problem requires the determination of the maximum points required to be able to buy down the…

Answered: Problem 6-68 Calculating Interest Rates…

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

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Problem 6-69 Calculating Interest Rates (LO2) You are buying a house and will borrow $210,000 on a 25-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4.40%. Alternatively, she tells you that you can "buy down" the interest rate to 4.15% if you pay points up front on the loan. A point on a loan is 1% (one percentage point) of the loan value. You believe that you will live in the house for only nine years before selling the house and buying another house. This means that in nine years, you w pay off the remaining balance of the original mortgage. What is the maximum number of points that you would be willing to pay now? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Maximum points YRE E 4
Problem 6-69 Calculating Interest Rates (LO2) You are buying a house and will borrow $205,000 on a 30-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4.35%. Alternatively, she tells you that you can "buy down" the interest rate to 4.15% if you pay points up front on the loan. A point on a loan is 1% (one percentage point) of the loan value. You believe that you will live in the house for only eight years before selling the house and buying another house. This means that in eight years, you will pay off the remaining balance of the original mortgage. What is the maximum number of points that you would be willing to pay now? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Maximum points
Question 9 You can afford a $1150 per month mortgage payment. You've found a 30 year loan at 7% interest. a) How big of a loan can you afford? b) How much total money will you pay the loan company? c) How much of that money is interest?
QUESTION 6 You have a 7-year loan of $80,000. The borrower will pay $8,500 at the end of Year 1, $9,500 at the end of Year 2, and $7,500 at the end of Year 3, plus X at the end of each year from Year 4 through Year 7. X is the fixed but unspecified cash flow. The loan's rate is 9%. What is X? O $22,3617.01 O $21,954.25 $23,350.31 O $19,411.02
Question 1 You can afford to pay $2,500 per month for mortgage payments. How large a loan can you afford if the interest rate is 3.75% for a 30-year fixed mortgage? Round to the nearest cent or two decimal places. Answer: $423,529.41 Question 2 Suppose you owe your credit card company $12,000. You are given the option to pay it off per month in equal monthly payments at a rate of 25%. a. How much is your monthly payment if you decide to pay off the debt in t-2 years? $750 b. How much is your monthly payment if you decide to pay off the debt in t=4 years? $500
Question 5 How much the monthly payment on a $114,000 home be if you get 4.1% interest over a 15 year loan with a $25,000 dollar balloon payment (rounded to the nearest dollar)?
Question 16 Your friend is going to borrow $87,500 using a 15 year mortgage with a 5.25% APR. Which of the following could you type into Excel to find her monthly mortgage payment? O =FV(0.0525/12,12*15,-87500) 12x15 .0525 = 875000 (1+ 12 12x15 .0525 87500 12 O 0.0525 12 x 15 x 12 x 87500 O =PV(0.0525/12,12*15,-87500) O=PMT(0.0525/12,12 15,-87500) 梦 $ a brt sc 6 69 bac 近

Problem 6-10 A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The loan will be $200,000 at 6 percent interest for 20 years. Required: a. What would be the maturity period if payments are bi-weekly? How much will the borrower pay in total under each payment option? Which choice would be less costly to the borrower? b. Assume that the bi-weekly loan was available for 575% What would be the maturity period if payments are bi-weekly? How much will the borrower pay in total under each payment option? Which choice would be less costly to the borrower? Complete this question by entering your answers in the tabs below. Required A Required B What would be the maturity period if payments are bi-weekly? How much will the borrower pay in total under each payment option? Which choice would be less costly to the borrower? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Maturity period Total monthly payments Total…
Question 9 Avi is expecting to get a $372,000 15 year mortgage. If the interest rate on the mortgage is 5.00% Use the Mortgage Payment Factors table to determine what Avi's monthly payment be on this mortgage. (Round your answer to the nearest whole dollar) Your Answer: Answer
Question 9 part c and d
Problem 7-16 This extended problem covers many of the features of a mortgage. You purchase a town house for $350,000. Since you are able to make a down payment of 20 percent ($70,000), you are able to obtain a $280,000 mortgage loan for 15 years at a 4 percent annual rate of interest. Use Appendix D to answer the questions. Round your answers to the nearest dollar. What are the annual payments that cover the interest and principal repayment?$ How much of the first payment goes to cover the interest?$ How much of the loan is paid off during the first year?$ What is the interest payment during the second year?$ What is the remaining balance after the second year?$ Why did the interest payment change during the second year? The annual -Select-increasedecreaseItem 6 in the amount owed -Select-increasesdecreasesItem 7 each subsequent interest payment.

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