Question

In: Finance

You are saving for the down payment on a house. The houses in the area you...

You are saving for the down payment on a house. The houses in the area you prefer have an average selling price of $450,000 and you need a 10% down payment to ensure your mortgage payments are not too high. You have $30,000 saved that you can invest today at 6.5% (annual compounding).

a) How long before you will have enough for the down payment saved?

b) You want to buy the house sooner. In addition to the $30,000 saved to date, how much would you need to invest each month (into the same investment) in order to have enough for the down payment in 2 years?

c) What would your payments be for part (b) if you made them at the beginning of the month instead of the end?

Solutions

Expert Solution

As nothing was mentioned excel is used.


Related Solutions

Luke and Amy are saving for the down payment on a house. The houses in the...
Luke and Amy are saving for the down payment on a house. The houses in the area they prefer have an average selling price of $450,000 and they need a 10% down payment to ensure their mortgage payments are not too high. They have $30,000 saved that they can invest today at 6.5% (annual compounding). a) How long before they will have enough for the down payment saved? b) They want to buy the house sooner.  In addition to the $30,000...
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...
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...
You are ready to buy a house, and you have $25,000 for a down payment and...
You are ready to buy a house, and you have $25,000 for a down payment and closing costs. Closing costs are estimated to be 4% of the loan value. You have an annual salary of $48,000 (monthly income $4000) , and the bank is willing to allow your monthly mortgage payment to be equal to 25% of your monthly income. The interest rate on the loan is 7.2% per year with monthly compounding (.6% per month) for a 30-year fixed...
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...
Suppose you want to accumulate $9,365.60 for a down payment for a house. You will deposit...
Suppose you want to accumulate $9,365.60 for a down payment for a house. You will deposit $400 at the ending of every 2 months in an account that credits interest every 2 months at the rate of 18% per annum. How long will it take you to achieve your goal?
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?
You would like to buy a house and will need a down payment of $19,367 in...
You would like to buy a house and will need a down payment of $19,367 in 8 months. How much would you have to invest, each month, starting next month, for 8 months to exactly pay for the down payment if your investments earn 2.58% APR compounded monthly?
You would like to buy a house and will need a down payment of $18,119 in...
You would like to buy a house and will need a down payment of $18,119 in 6 months. How much would you have to invest, each month, starting next month, for 6 months to exactly pay for the down payment if your investments earn 3.7% APR compounded monthly?
Buy a 3,000 SF house today for $240/SF (per square foot of living area). Down payment:...
Buy a 3,000 SF house today for $240/SF (per square foot of living area). Down payment: 30%. Annual rate of interest: 5.00%; monthly payments, fully amortized (i.e. a typical home loan) on a 30 year term. Assume that Property Taxes and Insurance are 1.2% of the purchase price, per year. How much, per month, do you need to cover the property tax and insurance? How much per month is the total of principal, interest, taxes, and insurance (PITI)? After 36...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT