Question

In: Finance

if you are buying a house valued at $210,000 with 10% down payment. You will borrow...

if you are buying a house valued at $210,000 with 10% down payment. You will borrow the remaininf 90% of the purchase prices at 6% APR and the loan will be paid off in 30 years, how much do you still owe two months from now?

Expert Solution

Value of house = $210,000

Loan Amount = 90% of Value of House = 90% of 210,000 = $189,000

Annual interest rate = 6%

Monthly Interest Rate = Annual Interest Rate / 12 = 6%/12 = 0.5%

Loan Period = 30 years = 30*12 months = 360 months

The monthly loan payment can be calculated using the PMT function in spreadsheet

PMT(rate, number of periods, present value, future value, when-due)

Where, rate = Monthly Interest Rate = 0.5%

number of periods = Loan Period = 360 months

present value = Loan Amount = $189,000

future value = 0

when-due = when is the payment made each month = end = 0

The monthly loan payment = PMT(0.5%, 360, 189000, 0, 0) = -$1,133.15

Loan balance after 2 months can be calculated using PV function in spreadsheet

PV(rate, number of periods, payment amount, future value, when-due)

Where, rate = Monthly Interest Rate = 0.5%

number of periods = Remaining Loan Period = 360-2 months = 358 months

payment amount = monthly loan payment = -$1,133.15

future value = 0

when-due = when is the payment made each month = end = 0

Loan balance after 2 months = PV(0.5%, 358, -1133.15, 0, 0) = $188,622.68

You owe $188,622.68 two months from now

jeff jeffy answered 1 year ago

You want to buy a house that costs $210,000. You have $21,000 for a down payment,...

You want to buy a house that costs $210,000. You have $21,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $189,000. However, the realtor persuades the seller to take a $189,000 mortgage (called a seller take-back mortgage) at a rate of 5%, provided the loan is paid off in full in 3 years. You expect to inherit $210,000 in 3 years, but right now all you have is $21,000, and...

You are buying a house for $350,000 with a 20% down payment. You use a 30-year...

You are buying a house for $350,000 with a 20% down payment. You use a 30-year monthly amortized mortgage at a 5.75% nominal interest rate. Monthly payments are &1,634. What is the estimated payoff on the mortgage after you have paid for 10 years?

Suppose you are buying the first house for $500,000 with 20% down payment. You have arranged...

Suppose you are buying the first house for $500,000 with 20% down payment. You have arranged to finance the remaining amount with a 15-year, monthly payment, amortized mortgage at nominal annual rate of 3.6%. What is remaining balance after 10 years with 120 monthly payments? $180,68.90 $79,777.39 $167,123.45 $157,881.37 Which of the following statements is/are INCORRECT? Unlimited liability and limited life are two key advantages of the corporate form over other forms of busiess organizations. Limited liability is an advantage...

You borrow $20,000 from your parents to make a house down payment at a mutually agreedupon...

You borrow $20,000 from your parents to make a house down payment at a mutually agreedupon annual interest rate of 5%, and a payback period of 5 years (direct reduction loan). What will be your annual, or monthly, payment amounts?

Justin Buzzer makes a 15 percent down-payment on a house valued $100,000 and takes out a...

Justin Buzzer makes a 15 percent down-payment on a house valued $100,000 and takes out a 20-year fixed rate mortgage with quarterly payments. The mortgage rate is 9 percent compounded quarterly with the first payment occurring at t = 1. What is Justin’s quarterly mortgage payment?

some wants to borrow 400,000 dollars for a house with 20% down payment at 5% compounding...

some wants to borrow 400,000 dollars for a house with 20% down payment at 5% compounding monthly.calculate his monthly payment and the total interest for each of the following periods : a- 30 years, b- 15 years. c- compare the savings in interest if mortgage is for 15years?

You just bought a house for $300,000. You put $100,000 as a down payment and borrow the remaining $200,000 from a bank.

You just bought a house for $300,000. You put $100,000 as a down payment and borrow the remaining $200,000 from a bank. You take out a 30-year mortgage that charges you 6 percent APR but with monthly compounding. A. (15 points) How much is your monthly mortgage payment? Show your work. B. (5 points) How much of your second mortgage payment goes towards interest? Show your work.

Suppose you want to buy a house which is valued at $100,000. You decide to borrow...

Suppose you want to buy a house which is valued at $100,000. You decide to borrow the money from the bank at an interest rate of 12.5 percent and agree to make equal annual end of year payments over the next 5 years to fully repay the loan. Also assume you work as a financial manager at the bank and you want to prepare a loan amortization schedule yourself. So, prepare the loan amortization schedule showing separate columns for the...

Brianna is buying a house for $190,000. She plans to make a 14% down payment. Closing...

Brianna is buying a house for $190,000. She plans to make a 14% down payment. Closing costs include $400 for 6 months of homeowners insurance, $1200 for 6 months of property tax, $125 for the title fee, and $450 in transaction fees. Brianna also agreed to pay two points in exchange for a 0.5% reduction in interest rate. Determine the amount of money Brianna needs to cover closing costs. Round your answer to the nearest cent.

2) You want to buy a house for $400,000 with 10% down payment. You take two...

2) You want to buy a house for $400,000 with 10% down payment. You take two mortgages to over the $360,000 needed to buy the house. They are: • Loan 1: Loan amount $160,000, fully amortizing 30-year fixed rate mortgage for 4.2%. This loan has 2 points and 1% pre-payment penalty. • Loan 2: Loan amount $200,000, fully amortizing 15-year, 5-year ARM with reset every five years. Initial interest rate is 3.6%. Margin set at 2% over prime rate. Expected...