Question

Lucinda Lacy purchased a foreclosed house today for $105,500 by making a down payment of 15% of the purchase price and paying closing costs of:

Loan origination fee                1.7% of purchase price

Appraisal fee                           $325

Survey fee                               210

Attorney’s fee                         420

Processing fee                         300

Escrow fee                              240

Other miscellaneous costs       620

Lucinda has a mortgage loan with an interest rate of 3.9% APR, compounded monthly for 30 years. Her taxes and insurance are $375 per month. Lucinda has an estimate for a contract for $8,500 firm, fixed price to remodel the house and this expense will be equally distributed over the period of her ownership. After remodeling, she estimates that she could sell the house for $135,000. Her selling expenses would be 7% sales commission plus $1000.

- draw the cash flow diagram?

-  manual (handwritten), calculations, including the ball-park method?

- hand calculating not excel?

Answer 1

This credit is an ordinary mortgage, monthly interest rate of 3.9% / 12, 30 12 period, the loan amount = 105,500 (15%), then use Excel inside = PMT () function calculates the month down to him also $ 422.97,6 months to go further $ 2,537.81
plus his other miscellaneous fees (you miscalculated 197,335), he spent a total of 2,537.81 + 105,500 105,500 15% + 1.7% + 325 + 210 + 420 + 300 + 240 + 620 + 375 + 135 000 +8500 6 7% + 1000 = 43,471.31,
then he sold the house was 135,000, after deducting front fees, after deducting the early repayment of bank loans (ie, the remaining bank mortgage loans gold)
88,879.41 (with Excel inside = PV () function to calculate, assuming there is no prepayment fee, etc.),
his net profit: 2,649.28,
return on assets 2,649.28 / 43,471.31 = 6.09%,
annualized after the assets was: 12.19%

Hope this helped you! Please comment below still if you have any doubts on this answer.