Question
In: Finance
You are ready to buy a house and you have $85,000 for a down payment and...
You are ready to buy a house and you have $85,000 for a down payment and closing costs. Closing costs are estimated to be 3.5% of the loan value. You have an annual salary of $125,000. The bank is willing to allow your monthly mortgage payment to be equal to 28% of your monthly income. The interest rate on the loan is 4.5% per year with monthly compounding for a 30-year fixed rate loan. How much money will the bank loan you? How much can you offer for the house? Construct a loan amortization table for the mortgage. Please submit the actual Excel spreadsheet with formulas embedded in the spreadsheet.
Solutions
Expert Solution
Monthly Income=125000/12=$10416.67
Monthly Loan repayment(PMT)=10416.67*28%=$2916.66, Monthly interest rate=4.5%/12=0.375%, nper=12*30=360
Hence, the loan amount= $575636.90
Now, closing cost=3.5%*575636.9=20147.29
Hence, you can offer=(575636.90+85000-20147.29)=$640489.6 for the house.
Below is the amortization schedule:
jeff jeffy answered 5 days agoRelated Solutions
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