Question

In: Finance

A homeowner is looking to buy a home in Marvin Gardens. The most he can afford...

A homeowner is looking to buy a home in Marvin Gardens. The most he can afford to pay in total is $1,800 per month. Yearly property taxes will be about $3,000 (escrowed monthly) and insurance is $110 per month. There are no other costs. If mortgage rates are 6.25% for a 30-year fixed-rate mortgage, how large can his mortgage be? If his parents give him $20,000 for a down payment, what is the most he can pay on a house with a 15-year mortgage if the interest rate is 5.50%?

Thank You

Solutions

Expert Solution

Calculation of Net Monthly Payment
Gross Monthly Payment $      1,800.00
Less: Property Tax (3000/12) $          250.00
Less: Insurance $          110.00
Net Monthly Payment $      1,440.00
Calculation of Present Value of mortgage
Net Monthly Payment $      1,440.00
Monthly Interest Rate (6.25%/12) 0.52%
Period =12*30= 360.00
Present Value of mortgage $233,873.60
Calculation of Maximum amount he can pay on a house
Net Monthly Payment $      1,440.00
Monthly Interest Rate (5.5%/12) 0.46%
Period =12*15= 180.00
Present Value of mortgage $176,236.59
Add Down Payment $    20,000.00
Maximum Amount He can pay $196,236.59

Please Upvote

Thanks

jeff jeffy answered 3 years ago
Next > < Previous

Related Solutions

Kimberly is looking to buy a home in California. The most he can afford to pay...
Kimberly is looking to buy a home in California. The most he can afford to pay in total is $2,000 per month. Yearly property taxes will be about $3,600 (escrowed monthly) and insurance is $120 per month. There are no other costs. If his parents give him $20,000 for a down payment, what is the most he can pay for a house with a 15-year mortgage if the interest rate is 5.60 percent?
Katekani is looking to buy a house and can afford a payment of R14 000.00 a month.
Katekani is looking to buy a house and can afford a payment of R14 000.00 a month. If the house costs R1 500 000 and Jane can get a 20 year loan at 10.25% p.a. compounded monthly, how much must Jane give as a deposit to lower her payment to R14 000.00 a month?
You are looking to buy a car. You can afford $650 in monthly payments for five...
You are looking to buy a car. You can afford $650 in monthly payments for five years. In addition to the loan, you can make a $750 down payment. If interest rates are 8 percent APR, what price of car can you afford (loan plus down payment)? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Joe Smith, a young Engineer has planned to buy a house that they could afford. He...
Joe Smith, a young Engineer has planned to buy a house that they could afford. He and his spouse have been saving even before getting married and have put away about $65,000. The average price of a start up house or condo is about $550,000 here in Los Angeles, California. They have the following options to take a Jumbo loan; 1.     ) 30-years fixed (% 20 down) ·       Note rate: 3.75 % ·       Cost: 0.0 Points 2.     ) 15-years fixed...
Sally wants to buy a car but is unsure how much of . she can afford....
Sally wants to buy a car but is unsure how much of . she can afford. The maximum monthly payment she can afford is $780.. Her bank’s interest rate is 14%. annually if she pays off the loan over 5 years. What is the maximum amount she can afford to borrow?    Impossible to calculate given the available data She can afford $53, 352.05 She can afford $46,800.03 D-She can afford $33,522,07    Someone said all options are wrong, can you...
You plan to buy ahouse and you can afford to pay a monthly mortgage of...
You plan to buy a house and you can afford to pay a monthly mortgage of $801 over 30 years. The bank has offered you a 3.34% interest rate, compounded monthly.How much you can afford to borrow for the house?Please round your answer to the second decimal without a dollar sign. E.g. 1234.56
Mary wants to buy a car but is unsure how much of she can afford. The...
Mary wants to buy a car but is unsure how much of she can afford. The maximum monthly payment she can afford is $780. Her bank's interest rate is 14% annualy if she pays off loan over 5 years. what is the maximum amount she can afford to borrow? - impossible to calculate with given data - she can afford $53,325.05 -she can afford $46,800.03 -she can afford $33,522.07 (show all excel work)
You’d like to buy a house. You can borrow $600,000 but you can only afford to...
You’d like to buy a house. You can borrow $600,000 but you can only afford to make monthly payments of $2,750. The lender agrees to allow you to make this payment on a 30 year mortgage, but then you must make a balloon payment to cover any shortfall. What is the dollar amount you’ll still owe if your mortgage rate is 4.349% $154,611 $174,763 $189,305 $217,206
You’d like to buy a house. You can borrow $600,000 but you can only afford to...
You’d like to buy a house. You can borrow $600,000 but you can only afford to make monthly payments of $2,750. The lender agrees to allow you to make this payment on a 30 year mortgage, but then you must make a balloon payment to cover any shortfall. What is the dollar amount you’ll still owe if your mortgage rate is 4.349% $174,763 $217,206 $189,305 $154,611 You have $12,000 in credit card debt and have finally decided to start to...
You are looking to buy a home under the following conditions. The bank will finance up...
You are looking to buy a home under the following conditions. The bank will finance up to 95% LTV on a home with a FRM at 5.25% FOR 30 years (monthly payments) and that the maximum payment to income ratio is 28% and total obligations to income is 36%. What price of home should you be looking at and how much down payment will be required? Assume your annual salary is $44,000, property taxes are about $1,800/year, hazard insurance is...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT