You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering you a 30-year mortgage that requires annual payments and has an interest rate of 8% per year. You can afford to pay only $25,320 per year. The bank agrees to allow you to pay this amount each year, yet still borrow $300,000. At the end of the mortgage (in 30 years), you must make a balloon payment; that s, you must repay the remaining balance on the mortgage. How much will be this balloon payment? Hint: The balloon payment will be in addition to the 30th payment. The balloon payment is $. (Round to the nearest dollar.)

You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering you a 30-year mortgage that requires annual payments and has an interest rate of 8% per year. You can afford to pay only $25,320 per year. The bank agrees to allow you to pay this amount each year, yet still borrow $300,000. At the end of the mortgage (in 30 years), you must make a balloon payment; that s, you must repay the remaining balance on the mortgage. How much will be this balloon payment? Hint: The balloon payment will be in addition to the 30th payment. The balloon payment is $. (Round to the nearest dollar.)

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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You need a 30-year, fixed-rate mortgage to buy a new home for $210,000. Your mortgage bank will lend you the money at a 7.1 percent APR for this 360-month loan. However, you can afford monthly payments of only $850, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at $850? Multiple Choice $677,443.06 $726,330.71 $83,517.92 O $698,394.91
Your annual income is $75,000 and you have $53,000 cash to cover down payment and closing cost of buying a house. You are looking at a house priced at $300,000 with monthly real estate tax and insurance cost amounting to $375. The lender will accept a down payment of 15% and the mortgage rate is 5%. The estimated closing cost is $6500. You have no other debt. Given the costs associated with the purchase of this house, mortgage rate, will you be able to take a 30-year mortgage to finance the purchase of this house with your income?
You decide to purchase your own property. The estimated purchase price is $1,600,000. You obtain 90% financing from the bank, 7% fixed rate for 25 years. How much do they have to pay the bank every year? How much do you still owe the bank in 14 years?
You have a loan outstanding. It requires making three annual payments at the end of the next three years of $1000 each. Your bank has offered to restructure the loan so that instead of making the three payments as originally agreed, you will make only one final payment at the end of the loan in three years. If the interest rate on the loan is 5%, what final payment will the bank require you to make so that it is indifferent between the two forms of payment?
You decide to do some remodeling in the kitchen. Your parents agree to lend you the money, but you insist on paying them interest. The agreement is that they will lend you $6000.00 at a simple interest rate of 1.5% per year. In how many months will the interest be $360.
Suppose you want to purchase a house. Your take-home pay is $4270 per month, and you wish to stay within the recommended guidelines for mortgage amounts by only spending 1/4 of your take-home pay on a house payment. You have $18,500 saved for a down payment and you can get an APR from your bank of 5.7%, compounded monthly. What is the total cost of a house you could afford with a 3030-year mortgage? Round your answer to the nearest cent, if necessary.
You have decided to purchase a house. The house has a current price of $300,000 and you plan on putting 20% down. You will finance the rest of the house cost by using a 30-year mortgage, 3.5% interest compounded monthly. How much will your monthly loan payment be?
You are thinking of purchasing a house. The house costs $354,000. You have $45,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 25-year mortgage that requires annual payments and has an interest rate of 6% per year. What will be your annual payment if you sign this mortgage?
Suppose a property you are seeking to purchase is valued at $200,000. You can take out a loan of 80 percent from the bank, which amortizes in 30 years. The current market interest rate is 7.35 percent. Suppose you can only afford a monthly payment of USD 900, but the seller is desperate to sell this property. The seller has already lowered the selling price to USD 180,000. What is the minimum amount of rebate that the seller should provide to you in order to make you purchase the property?
You have a loan outstanding. It requires making four annual payments of $1000 each at the end of the next four years. Your bank has offered to allow you to skip making the next three payments in lieu of making one large payment at the end of loan's term in four years. If the interest rate on the loan is 7%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment? Round answer to nearest dollar
= You would like to buy a house that costs $350,000. You have $55,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. You can afford to pay only $23,060 per year. The bank agrees to allow you to pay this amount each year, yet still borrow $295,000. At the end of the mortgage (in 30 years), you must make a balloon payment; that is, you must repay the remaining balance on the mortgage. How much will this balloon payment be? The balloon payment is $ (Round to the nearest cent.)
You are borrowing $250,000 to buy a house, using a standard, 30-year mortgage. Your mortgage lender offers a 5.50% mortgage with no points, or a 5.20% mortgage with X points. You plan on living in the house for exactly 84 months, paying only the required payment each month, and without refinancing your mortgage. What points will make you indifferent between the two mortgages? Use the 5.50% rate to discount cash flows between the two options. Note: all rates in the problem are nominal annual rates with monthly compounding. Recall, 1 point is 1% of the mortgage. Carry your answer to 2 decimal places. For example, if your answer is 1.255 points, answer "1.26". a

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