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%. You have the funds to cover the estimated closing cost of $6500 and down payment. You have no other debt. Given the costs associated with the purchase of the above house and the mortgage rate, will you be able to take a 30-year mortgage under rule 28 to finance the purchase of this house with your income? What would be the highest house value you can afford with your income if the costs associated with the purchase are the same as in (a)?

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%. You have the funds to cover the estimated closing cost of $6500 and down payment. You have no other debt. Given the costs associated with the purchase of the above house and the mortgage rate, will you be able to take a 30-year mortgage under rule 28 to finance the purchase of this house with your income? What would be the highest house value you can afford with your income if the costs associated with the purchase are the same as in (a)?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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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 want to buy a house that costs $100,000. You have $10,000 for a down payment, but your creditis such that mortgage companies will not lend you the required $90,000. However, the realtorpersuades the seller to take a $90,000 mortgage (called a seller take-back mortgage) at a rate of 7%,provided the loan is paid off in full in 3 years. You expect to inherit %100,000 in 3 years; but rightnow all you have is %10,000, and you can afford to make payments of no more than %7,500 per yeargiven your salary. (The loan would call for monthly payments, but assume end-of-year annualpayments to simplify things.)a. If the loan was amortized over 3 years, how large would each annual payment be? Could youafford those payments?b. If the loan was amortized over 30 years, what would each payment be? Could you afford those payments?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…
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 7% per year. You can afford to pay only $23,690 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 is, 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. Luctr The balloon payment is $ (Round to the nearest dollar.) FAFSA. ereen Shot -12. 8.51 AM Ereen Shot -12.57.37 PM 2 creen Shot 12.9.00 PM 2021- O Time Remaining: 00:24:55 Submit test 11 A O Ctv DO DII F12 F11 F10 88 F9 FB F7 F6 F5 F4 esc F3 F2 F1 & 2# $ % 9 @ 7 8 4 1 2 P R T Y Q W E tab K * 00 LO
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