You want to buy a $160,000 home. You plan to pay as a down payment, and take out a 30 year loan at 4.65% interest for the rest. The bank will charge 2 points on the amount financed. a) What is the amount of the down payment? LA
You want to buy a $160,000 home. You plan to pay as a down payment, and take out a 30 year loan at 4.65% interest for the rest. The bank will charge 2 points on the amount financed. a) What is the amount of the down payment? LA
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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![Transcription for an Educational Website:
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**Home Loan Calculation Exercise**
You want to buy a $160,000 home. You plan to pay 5% as a down payment, and take out a 30-year loan at 4.65% interest for the rest. The bank will charge 2 points on the amount financed.
**Questions:**
a) What is the amount of the down payment?
> [Input Field]
b) How much is the loan amount going to be?
> [Input Field]
c) What will be the amount charged for 2 points?
> [Input Field]
d) Find the amount of the monthly payment.
> [Input Field]
---
**Explanation of Terms:**
- **Down Payment:** This is the initial upfront portion of the total amount due, paid at the time of purchase.
- **Loan Amount:** This refers to the amount you borrow from the bank after the down payment is made.
- **Points:** Points are upfront fees paid to the lender at closing in exchange for a reduced interest rate. One point is equal to 1% of the loan amount.
- **Monthly Payment:** This is the amount you pay every month to repay the loan within the agreed period.
This exercise is designed to help you understand the components of a typical home loan and how to calculate each part needed to plan your finances efficiently.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F79b24956-5ec9-4c53-911d-9c67a7f313db%2Fe6e0a026-40ab-439f-86f5-19abd3b3b987%2Fhtbufnk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Transcription for an Educational Website:
---
**Home Loan Calculation Exercise**
You want to buy a $160,000 home. You plan to pay 5% as a down payment, and take out a 30-year loan at 4.65% interest for the rest. The bank will charge 2 points on the amount financed.
**Questions:**
a) What is the amount of the down payment?
> [Input Field]
b) How much is the loan amount going to be?
> [Input Field]
c) What will be the amount charged for 2 points?
> [Input Field]
d) Find the amount of the monthly payment.
> [Input Field]
---
**Explanation of Terms:**
- **Down Payment:** This is the initial upfront portion of the total amount due, paid at the time of purchase.
- **Loan Amount:** This refers to the amount you borrow from the bank after the down payment is made.
- **Points:** Points are upfront fees paid to the lender at closing in exchange for a reduced interest rate. One point is equal to 1% of the loan amount.
- **Monthly Payment:** This is the amount you pay every month to repay the loan within the agreed period.
This exercise is designed to help you understand the components of a typical home loan and how to calculate each part needed to plan your finances efficiently.
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