1a. The market value of your house is $175,000 and you have a first mortgage balance...

1a. The market value of your house is $175,000 and you have a first mortgage balance of $100,000. If a lender requires a 80% loan-to-market value ratio, how large could your home equity loan be?

1b. Isabelle (a single taxpayer) contributes $6,000 annually to her church. In addition, she owns a home in which she has $20,000 equity, and she itemizes deductions. If she pays $1,000 interest on credit cards, $6,000 interest on her home equity loan, and is in the 26% marginal tax bracket, calculate Isabelle's tax savings from these interest payments.

Expert Solution

Solution 1.

The total loan possible on the house = 80% * $175000 = $140000

home equity loan = $140000-first mortgage

= $140000-$100000

= $40000.

Solution 2.

Total tax savings= Deductible expenses (i.e those exempt under law)*Tax rate

=(6000+20000+1000+6000)*26%

=$8580.

jeff jeffy answered 2 years ago

In purchasing a house that is worth $175,000, you need to obtain a mortgage. Suppose you...

In purchasing a house that is worth $175,000, you need to obtain a mortgage. Suppose you choose a 30year fixed rate mortgage with an interest rate/year of 9.74%. What is the annual payment required? How much of each year's payment goes to paying interest and how much to reducing the principal balance for the first 15 years?

You plan to purchase a house for $175,000 using a 15-year mortgage obtained from your local...

You plan to purchase a house for $175,000 using a 15-year mortgage obtained from your local bank. You will make a down payment of 25 percent of the purchase price. You will not pay off the mortgage early. (LG 7-3) a. Your bank offers you the following two options for payment: Option 1: Mortgage rate of 5 percent and zero points. Option 2: Mortgage rate of 4.75 percent and 2 points. Which option should you choose? b. Your bank offers...

Over Spring Break you shopped for a mortgage for your first house. You got a quote...

Over Spring Break you shopped for a mortgage for your first house. You got a quote from a bank with an effective annual rate of 4.0% on a 30-year mortgage, that will be paid back in monthly installments. The loan amount is $100,000. However, in order to receive this relatively low interest rate, the bank required that you pay 2-points during the origination of your loan (a point is 1% of your loan). With you paying this one-time fee at...

You have just sold your house for$1,000,000 in cash. Your mortgage was originally a 30-year mortgage...

You have just sold your house for$1,000,000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of$800,000.The mortgage is currently exactly 18½ years old, and you have just made a payment. If the interest rate on the mortgage is 5.25% (APR), how much cash will you have from the sale once you pay off the mortgage? (Note: Be careful not to round any intermediate steps less than six decimal places.) Cash that remains...

You have just sold your house for $ 1,100,000 in cash. Your mortgage was originally a?...

You have just sold your house for $ 1,100,000 in cash. Your mortgage was originally a? 30-year mortgage with monthly payments and an initial balance of $ 750,000. The mortgage is currently exactly? 18½ years? old, and you have just made a payment. If the interest rate on the mortgage is 6.25 % ?(APR), how much cash will you have from the sale once you pay off the? mortgage? 1.Cash that remains after payoff of mortgage is ?$_____ (Round to...

You have just sold your house for $ 900,000 in cash. Your mortgage was originally a...

You have just sold your house for $ 900,000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of $ 700 comma 000The mortgage is currently exactly 18½ years old, and you have just made a payment. If the interest rate on the mortgage is 5.25 % (APR), how much cash will you have from the sale once you pay off the mortgage? (Note: Be careful not to round any intermediate steps less...

You have just sold your house for $ 900 000 in cash. Your mortgage was originally...

You have just sold your house for $ 900 000 in cash. Your mortgage was originally a? 30-year mortgage with monthly payments and an initial balance of $ 800000. The mortgage is currently exactly? 18½ years? old, and you have just made a payment. If the interest rate on the mortgage is 5.25 % ?(APR), how much cash will you have from the sale once you pay off the? mortgage?

6. You have just sold your house for $1,000,000 in cash. Your mortgage was originally a...

6. You have just sold your house for $1,000,000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of $800,000. The mortgage is currently exactly 18½ years old, and you have just made a payment. If the interest rate on the mortgage is 5.25% (APR), how much cash will you have from the sale once you pay off the mortgage? (Note: Be careful not to round any intermediate steps less than six decimal...

You have just sold your house for $ 1,100, 000 in cash. Your mortgage was originally...

You have just sold your house for $ 1,100, 000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of $ 800,000. The mortgage is currently exactly 18½ years old, and you have just made a payment. If the interest rate on the mortgage is 7.75 % (APR), how much cash will you have from the sale once you pay off the mortgage? (Note: Be careful not to round any intermediate steps less...

Suppose you are buying a house and have taken out a mortgage for $250,000. The mortgage...

Suppose you are buying a house and have taken out a mortgage for $250,000. The mortgage is a 30 year fixed rate mortgage with an APR of 5.25%. What is your monthly mortgage payment? Construct a loan amortization table in Excel for mortgage loan in the previous problem. You should do the problem in Excel using monthly payments and you must submit the spreadsheet with formulas.

Question