You want to buy a house that costs $280,000. You have $28,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $25 However, the realtor persuades the seller to take a $252,000 mortgage (called a seller take-back mortgage) at a rate of 6%, provided the loan is paid off in full in 3 years expect to inherit $280,000 in 3 years, but right now all you have is $28,000, and you can afford to make payments of no more than $19,000 per year given your salary. ( would call for monthly payments, but assume end-of-year annual payments to simplify things.) a. If the loan was amortized over 3 years, how large would each annual payment be? Do not round intermediate calculations. Round your answer to the nearest ce $ Could you afford those payments? -Select- b. If the loan was amortized over 30 years, what would each payment be? Do not round intermediate calculations. Round your answer to the nearest cent. $ Could you afford those payments? -Select- c. To satisfy the seller, the 30-year mortgage loan would be written as a balloon note, which means that at the end of the third year, you would have to make the payment plus the remaining balance on the loan. What would the loan balance be at the end of Year 3, and what would the balloon payment be? Do not round
You want to buy a house that costs $280,000. You have $28,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $25 However, the realtor persuades the seller to take a $252,000 mortgage (called a seller take-back mortgage) at a rate of 6%, provided the loan is paid off in full in 3 years expect to inherit $280,000 in 3 years, but right now all you have is $28,000, and you can afford to make payments of no more than $19,000 per year given your salary. ( would call for monthly payments, but assume end-of-year annual payments to simplify things.) a. If the loan was amortized over 3 years, how large would each annual payment be? Do not round intermediate calculations. Round your answer to the nearest ce $ Could you afford those payments? -Select- b. If the loan was amortized over 30 years, what would each payment be? Do not round intermediate calculations. Round your answer to the nearest cent. $ Could you afford those payments? -Select- c. To satisfy the seller, the 30-year mortgage loan would be written as a balloon note, which means that at the end of the third year, you would have to make the payment plus the remaining balance on the loan. What would the loan balance be at the end of Year 3, and what would the balloon payment be? Do not round
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 want to buy a house that costs $280,000. You have $28,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $252,000.
However, the realtor persuades the seller to take a $252,000 mortgage (called a seller take-back mortgage) at a rate of 6%, provided the loan is paid off in full in 3 years. You
expect to inherit $280,000 in 3 years, but right now all you have is $28,000, and you can afford to make payments of no more than $19,000 per year given your salary. (The loan
would call for monthly payments, but assume end-of-year annual payments to simplify things.)
a. If the loan was amortized over 3 years, how large would each annual payment be? Do not round intermediate calculations. Round your answer to the nearest cent.
$
Could you afford those payments?
-Select-
b. If the loan was amortized over 30 years, what would each payment be? Do not round intermediate calculations. Round your answer to the nearest cent.
$
Could you afford those payments?
-Select-
c. To satisfy the seller, the 30-year mortgage loan would be written as a balloon note, which means that at the end of the third year, you would have to make the regular
payment plus the remaining balance on the loan. What would the loan balance be at the end of Year 3, and what would the balloon payment be? Do not round
intermediate calculations. Round your answers to the nearest cent.
Loan balance: $
Balloon payment: $
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