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 1 5 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? $ (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? $
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 1 5 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? $ (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? $
Chapter3: Income Sources
Section: Chapter Questions
Problem 57P
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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
| 1 |
| 5 |
(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?
$
(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?
$
(d)
What is the total amount (in $) of interest that will be paid over the life of the loan?
$
(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)?
$
(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?
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| 4 |
Yes, they will qualify.No, they will not qualify.
(g)
What monthly income (in $) would be required to qualify for this size mortgage payment?
$
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