Answer:
(a) $80,000 (b) $320,000 (c) $10,700 (d) $1,574.21 (e) $246,714.75 (f) $440.87
Explanation:
Solution
Given that:
Now
(a)The price of the house = 400,000
The down payment = 20%
The value of down payment = 20%*400,000
= $80,000
(b) The loan value or amount financed = Purchase Price - Down Payment
= 400,000 - 80,000
= $320,000
(c) Thus
The loan value = $320,000
1 Point has to be paid at the closing time and also, the closing fees of $7,500 has to be paid
So, the amount paid at the time of closing = 1%*320000 + 7500
= 3200 + 7500
= $10,700
(d) To compute the Monthly payment we make use of the PMT function in Excel
Which is given below:
4= PMT(Rate, Nper, PV, FV,Type)
Rate = 4.25%/12
Nper = 30*12
= 360
PV = 320000
FV = 0
Type = 0
=PMT(4.25%/12, 360, -400000,0,0)
= $1,574.21
(e) Now we find the total amount paid over 30 years which is given as :
Total amount paid over 30 years
= 1,574.21*360 = $566,714.75
The loan amount = $320,000
Total interest cost = 566,714.75 - 320,000
= $246,714.75
(f) The Interest paid during first installment is as follows:
= 4.25%*320000/12
= $1,133.33
Monthly installment = $1,574.21
The Principal repayment = Monthly installment - Interest paid during first installment
= 1,574.21 - 1,133.33
= $440.87
