You plan to purchase a house for $295000 using a 30-year mortgage obtained from your local bank. You will make a down payment of 20 percent of the purchase price. You will not pay off the mortgage early.  Your bank offers you the following two options for payment.   Option 1: Mortgage rate of 5.35 percent and 1 point. Option 2: Mortgage rate of 5.25 percent and 2 points. Which option should you choose?

Q: Explain which is the better option.

A: Information Provided: House costs = $100,000 Down payment = $25,000 Option A = 3% APR for 20 years…

Q: You are a loan officer at the West Elm Savings and Loan. Mr. and Mrs. Brady are in your office to…

A: Market Value of House= $170000 Down Payment= 1/5th Of Market value                        = 1/5 x…

Q: Melissa wants to buy a townhouse that costs $71,000. The bank requires a 5% down payment. The rest…

A: A written agreement through which a lender gets the right to take the property that is put as a…

Q: You are purchasing a house and you are considering getting a fixed-rate mortgage (FRM) for $750,000.…

A: Required monthly payments for the mortgage is calculated using excel PMT function Required monthly…

Q: You have decided to buy a 3,250 square-feet house in Denton, close to a good public school. The…

A: Monthly payments for loan amount is calculated in excel formula =PMT. Monthly payment for 3rd year…

Q: You are considering purchasing a new home. You will need to borrow AED 4,000,000 to purchase the…

A: Monthly Payment refers to the payment that is to be paid monthly for a specific period of time to…

Q: You purchase a cottage for $190,000. You obtain a 30-year, fixed rate mortgage loan at 12.0% after…

A: Loan amortization is the process of reimbursement of loan periodically by the borrower of the loan…

Q: You need a 30-year, fixed-rate mortgage to buy a new home for $250,000. Your mortgage bank will lend…

A: Loan Amount = 250,000 Monthly Interest % = 5.45%/12 = .454% Monthly Payment = 900 Time period =…

Q: Suppose you had to choose between a 9% 25-year mortgage or a 8.5% mortgage with 2 discount points.…

A: The discount points in mortgages are the points that can classify into borrower and lender points.…

Q: You are a loan officer at the West Elm Savings and Loan. Mr. and Mrs. Brady are in your office to…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on…

A: Balloon payment calculation:

Q: You plan to purchase a $100,000 house using a 30 year mortgage obtained from your local credit…

A: Installment is the periodic amount paid by the borrower to the lender in order to pay back the loan…

Q: You decide to buy P1,800,00 home. If you make a 25% down payment, you can get a 20-year mortgage at…

A: Given:

Q: Suppose you want to buy a rent to own house worth P450,000. You made a down payment of 15% of the…

A: Mortgage loan: Providing the lender with an immovable asset, such as a home or commercial property,…

Q: You plan to purchase a house for $115,000 using a 30-year mortgage obtained from your local bank.…

A: Discount points refer to the optional fees (extra charges) over the agreed stated interest rate on a…

Q: A couple plans to purchase a vacation home. The bank requires a 10% down payment on the s210,000…

A: We need to use PMT equation to calculate monthly payment. The equation is PMT =P*i1-1(1+i)n where…

Q: You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on…

A: PV of annuity: For any given period, the present value (PV) formula would calculate the present…

Q: Maya Womak wishes to purchase a(n) $645,000 house. She has accumulated a $125,000 down payment, but…

A: Working  Note #1 Computation of loan amount::::: Cost of house                 = $645,000 Less: Down…

Q: You are considering purchasing a new home. You will need to borrow $280,000 to purchase the home. A…

A: Purchase cost of Home = 280,000 Years = 20 APR= 9%   Find out PMT

Q: Use a banker's year described above to answer this question. To complete the sale of a house, the…

A: Simple Interest: It is the interest charged on loan/savings account . Calculation: Daily interest is…

Q: You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on…

A: The question is based on the concept of Loan and mortgages

Q: You are planning to take out a 5 hundred thousand dollar fixed-rate mortgage with a 30-year term and…

A: In this question the loan of offered at a discount of 3 points which means 3% discount.

Q: You have been shopping for a new home. You have the choice of financing for your $300,000. You can…

A: Principle amount is $300,000 We have two Choices:- 1st Choice:- Rate of interest is 4.5% Loan…

Q: You want to purchase a house for $85,000, and you have $17,000 cash available for a down payment.…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: You are looking to buy a $415,000.00 home in Haverhill. If Bank of America will give them a 15-year…

A: Amount financed = Cost of house - down payment = $415,000 - ($415,000 *20%) = $332,000 Monthly…

Q: You are planning to purchase a house that will require a mortgage of $400,000.  You find 2 mortgage…

A: The company is considering the value of mortgage for the purpose of financing the assets of the…

Q: You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on…

A: PV is the current worth of cash flows that are expected to occur in the future.

Q: You agree to purchase a home for $150,000 and decide to make a 20% down payment on the home.  You…

A: Please see the next step for the solution

Q: The Fritzes are buying a house that sells for $100,000. The bank is requiring a minimum down payment…

A: Formulas:

Q: Robert plans to take out a mortgage for a house he just bought for $1 million. Bank A is offering a…

A: The calculation is:

Q: Your monthly mortgage payment (principal plus interest) is $1,500. If you have a 30-year loan with a…

A: Installment is the amount of periodic payments a lender has to make to its borrower in order to pay…

Q: You purchase a home costing $480,000 with a 20% down payment. After shopping around for a mortgage,…

A: Thus, Monthly Payment in option 1 is $1583.32 and in Option 2 is $1586.07

Q: Let’s assume that you plan to purchase a house which is selling for $350,000 today. You will make a…

A: Formulas that are used:-

Q: You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on…

A: Here,

Q: You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you…

A: Given, Rate per period = 0.06 Total number of payments (nper) = 30 Present value (pv) = 300,000…

Q: Mr. Smith is purchasing a $ 180000 house. The down payment is 20 % of the price of the house. He is…

A: The monthly mortgage amount: A housing loan is usually repaid with a fixed repayment each month…

Q: Todd Foley is applying for a $290,000 mortgage. He can get a $2,030 monthly payment for principal…

A: Calculation of number of months:Excel spreadsheet for calculation of number of months

Q: You want to purchase a home for $747,555 in South Calga at BMO has informed you that the rate on…

A: Mortgage payment are made monthly payment that carry payment of principal amount and interest…

Q: Carlos is considering purchasing a new home. His banker has presented a 15-year mortgage at a fixed…

A: Before writing pmt function in excel we need to understand the following  Rate can be written as…

Q: You want to buy a house that costs $100,000. You have $10,000 for a down payment, but your credit is…

A: House cost = $ 100,000 Down Payment = $10,000 Interest rate = 7% Time period =3 years

Q: You want to buy a house that has a purchase price of $190,000. You plan to make a down payment of…

A: Loan amortization refers to a schedule which is prepared to shows the periodic loan payments, amount…

Q: A new family who wants to purchase a home with a price of $250,000 has $50,000 for a down payment.…

A: Here, Purchase price = $250,000 Down payment = $50,000 Interest rate = 3.50% Term of loan = 15 years…

Q: You apply for a mortgage loan on a $120,000 condo using 80% loan-to-value.  Going interest rates are…

A: Any financial institution which is lending money to businesses or the individuals always keep some…

Q: Suppose that you decide to purchase a new car. You go to a credit union to get preapproval for your…

A: According to the time value of money concept, the value of the amount of money in the future is less…

Q: You are considering purchasing a new home. You will need to borrow $280,000 to purchase the home. A…

A: A mortgage is a long-term loan designed to help you buy a house. In addition to repaying the…

Loans

A loan is a term that we are all familiar with. The processing of loans is one of the most important functions of a bank. It keeps our economy stable and facilitates the implementation of monetary policies. Let's take a look at the different forms of loans and get some answers to some common questions.