You are a loan officer at the West Elm Savings and Loan. Mr. and Mrs. Brady are in your office to apply for a mortgage loan on a house they want to buy. The house has a market value of $170,000. Your bank requires - of the market value as a down payment. (a) What is the amount (in $) of the down payment? (b) What is the amount (in $) of the mortgage for which the Bradys are applying? $ 170,0 (c) Your bank offers the Bradys a 30 year mortgage with a rate of 5%. At that rate, the monthly payments for principal and interest on the loan will be $5.37 for every $1,000 financed. What is the amount (in $) of the principal and interest portion of the Bradys' monthly payment? $ 95
You are a loan officer at the West Elm Savings and Loan. Mr. and Mrs. Brady are in your office to apply for a mortgage loan on a house they want to buy. The house has a market value of $170,000. Your bank requires - of the market value as a down payment. (a) What is the amount (in $) of the down payment? (b) What is the amount (in $) of the mortgage for which the Bradys are applying? $ 170,0 (c) Your bank offers the Bradys a 30 year mortgage with a rate of 5%. At that rate, the monthly payments for principal and interest on the loan will be $5.37 for every $1,000 financed. What is the amount (in $) of the principal and interest portion of the Bradys' monthly payment? $ 95
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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Transcribed Image Text:You are a loan officer at the West Elm Savings and Loan. Mr. and Mrs. Brady are in your office to apply for a mortgage loan on a house they want to buy. The house has a market value of $170,000.
Your bank requires -
of the market value as a down payment.
(a) What is the amount (in $) of the down payment?
$
(b) What is the amount (in $) of the mortgage for which the Bradys are applying?
$ 170,0
(c) Your bank offers the Bradys a 30 year mortgage with a rate of 5%. At that rate, the monthly payments for principal and interest on the loan will be $5.37 for every $1,000 financed. What is
the amount (in $) of the principal and interest portion of the Bradys' monthly payment?
$ 95
(d) What is the total amount (in $) of interest that will be paid over the life of the loan?
$ 2,850
(e) Your bank also requires that the monthly mortgage payments include property tax and homeowners insurance payments. If the property tax is $1,710 per year and the property insurance is
$1,458 per year, what is the total monthly payment (in $) for PITI (principal, interest, taxes, and insurance)?
$ 264
(f) To qualify for the loan, bank rules state that mortgage payments cannot exceed
of the combined monthly income of the family. If the Bradys earn $3,750 per month, will they qualify for
this loan?
O Yes, they will qualify.
O No, they will not qualify.
(g) What monthly income (in $) would be required to qualify for this size mortgage payment?
$ 4,250
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