Question

Kathy wants to buy a condominium selling for ​$95 comma 000. The taxes on the property are ​$1500 per​ year, and​ homeowners' insurance is ​$346 per year.​ Kathy's gross monthly income is ​$5000. She has 15 monthly payments of ​$135 remaining on her van. The bank is requiring​ 20% down and is charging a​ 9.5% interest rate with no points. Her bank will approve a loan that has a total monthly mortgage payment of​ principal, interest, property​ taxes, and​ homeowners' insurance that is less than or equal to​ 28% of her adjusted monthly income. Complete parts ​a) through h​) below. ​a) Determine the required down payment.

Answer 1

Answer:

Check the answers below!

Explanation:

There is just one question despite the exercise requires completition of 7 additional numerals.

a. Required down payment  = Price of the condominium * interest rate required by the bank.

$95.000 * 20% =  $19.000

b. 28% of adjusted monthly income is:

(5000-145)*28%=

1359.4

c. Monthly payments of principal and interest for a​ 25-year loan.

Using PV of ordinary annuity formula,

with PV of the bank loan =96000*80%=76800

d.Total monthly payment=

671+((346+1400)/12)=

817

e.YES---- 817 < 1359.4

​f. Amt. of First payment on the loan applied to the principal:

671-(76800*0.00792)=

62.74

ie.$ 63

​g.Total amount she pays for the condominium with a​ 25-year conventional loan(without including taxes &​ homeowners' insurance)

671*12 mths. *25 yrs. =

201300

​h) So, Total interest paid for the​ 25-year loan:

201300-76800=

124500

No.of periods=25*12=300

at monthly interest of 9.5%/12=

76800=Pmt.*(1-1.00792^-300)/0.00792

Solving the above, we get the monthly payment as 671