Question
In: Finance
You are ready to buy a house and you have $50,000 for a down payment and...
- You are ready to buy a house and you have $50,000 for a down
payment and closing costs. Closing costs are estimated to be 2.5%
of the loan value. You have an annual salary of
$200,000. The bank is willing to allow your housing costs –
mortgage, property tax and homeowners insurance to be equal to 28%
of your monthly income. You have estimated that property tax will
be $1,000/month and homeowner’s insurance will be $100/month. The
interest rate on the loan is 3.4% 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?
- Create a loan amortization table in Excel and submit the spreadsheet. This should be done with monthly payments.
Solutions
Expert Solution
Maximum permissible monthly payments= $3,566.67 as follows:
Maximum permissible monthly payments= $3,566.67 as follows:
Loan given by the Bank= $804,242.98
Amount offered for the house= $834,136.90
Details of calculation and amortization schedule (with initial and closing entries) are given below:
Details of calculation:
Amortization schedule below:
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