You have decided to become a student landlord and plan to buy a house in “The...

You have decided to become a student landlord and plan to buy a house in “The Village” for $920,000. You parents have agreed to supply $200,000 to be used as a down payment, leaving $720,000 to be financed by means of a mortgage. The mortgage broker has quoted 5.25% quoted rate based on a 25-year amortization, which will be compounded semi-annually in accordance with Canadian law.

a) What would be the amount of monthly payments on the mortgage?

b) What would be the principal outstanding after five (5) years?

Round your final answer to 2 decimal points

Expert Solution

GIVEN THAT:-

1. PRINCIPAL LOAN AMOUNT = 720000

2. INTEREST RATE = 5.25%, COMPUNDED SEMI ANNUALLY

3. TENURE OF LOAN = 25 YEARS

NOW HERE IT IS GIVEN THAT INTEREST IS COMPOUNDED SEMI ANNUALLY HENCE WE HAVE TO CONVERT IT TO ANNUAL COMPUNDING INTEREST RATE.

jeff jeffy answered 2 years ago

You have decided to become a student landlord and plan to buy a house for $920,000....

You have decided to become a student landlord and plan to buy a house for $920,000. You parents have agreed to supply $200,000 to be used as a down payment, leaving $720,000 to be financed by means of a mortgage. The mortgage broker has quoted 5.25% quoted rate based on a 25-year amortization, which will be compounded semi-annually in accordance with the law. a) What would be the amount of monthly payments on the mortgage? b) What would be the...

Suppose that you decided to buy a new house. The house you want to buy costs...

Suppose that you decided to buy a new house. The house you want to buy costs $520,000 and the interest rate is 7%. You currently have $130,000 and are required to put a 20% down payment plus an additional 3% of the loan amount as closing costs. 1) When will you have enough money for the down payment and closing costs, assuming that the $80,000 is the only investment that you make? 2) Suppose that you plan to buy the...

You have decided to purchase a house that has a price of $150,000. You plan on...

You have decided to purchase a house that has a price of $150,000. You plan on putting 10% down and then financing the rest. Assuming you are able to get a 3% annual interest rate compounded monthly, what is your monthly payment?

You have decided to buy a house for $600,000. You have saved enough money to make...

You have decided to buy a house for $600,000. You have saved enough money to make a 20% down payment, but you will need to borrow the remainder. You arrange for a 30-year mortgage (monthly payments) with a local bank at a stated rate of 3.6% APR. a) What will be your monthly payment? b) Construct the amortization table for the first 12 months of payments (showing how much of your payment goes to principal, how much goes to interest,...

You plan to buy a house in 24 months. The cost of the house at that...

You plan to buy a house in 24 months. The cost of the house at that time will be $300,000 . How much do you have to invest each month, starting next month, for 12 months to exactly pay for the house if you r investments earn 4.50% APR (compounded monthly)?

You have decided to buy a house. You can get a mortgage rate of 5.75 percent,...

You have decided to buy a house. You can get a mortgage rate of 5.75 percent, and you want your payments to be $1,050 or less. How much can you borrow on a 15-year fixed-rate mortgage? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Mortgage Amount:_______

Festus and Fran have decided to buy a house. The purchase price is $175,000. They have...

Festus and Fran have decided to buy a house. The purchase price is $175,000. They have saved $25,000 for a down payment. The amount to be financed is $150,000. Consider the following two loan options for Festus and Fran: I. Borrow $150,000 for 15 years (180 months) at 4% APR. What will the monthly payment be? How much total interest will Festus and Fran have to pay over the term of the loan? II. Borrow $150,000 for 30 years (360...

You plan to buy a house for $210,000. You have been offered a 20 year mortgage...

You plan to buy a house for $210,000. You have been offered a 20 year mortgage with a rate of 4.8%. You make a $30,000 down payment. Closing costs are 5%. In the Amortization schedule for the first month, the interest, in dollars and cents, will be $_____ In the Amortization schedule for the first month, payment on principal, in dollars and cents, will be $______ In the Amortization schedule for the first month, the balance on the loan at...

You plan to retire in 15 years and buy a house in Oviedo, Florida. The house...

You plan to retire in 15 years and buy a house in Oviedo, Florida. The house you are looking at currently costs $150,000 and is expected to increase in value each year at a rate of 6 percent. Assuming you can earn 9 percent annually on your investments, how much must you invest at the end of each of the next 15 years to be able to buy your dream home when you retire? a. If the house you are...

You want to buy a house. You have found the house you like and have agreed...

You want to buy a house. You have found the house you like and have agreed to purchase the house for $300,000. You go to the bank to get a loan and have decided that a 30 year mortgage loan is the best loan duration. What do you think the interst rate will be on your loan given the following data? "Real" interest rate given current macro econmomic conditions = 2.0% The inflation rate forecasted for the future is =...

Question