Question

QUESTION 1 Suppose you are planning to purchase a home with a value of 5125,000. The bank has offered you a mortgage to finance 80% of the value of the home. How much of your own equity do you need to ivest in the purchase of the home? O $100.000 $125,000 O $25,000 O so QUESTION 2 1. Based on current interset rates, and your credit score. suppose the banik offers you a 30-year, fully-amortizing mortgage with monthly payments at an annual interest rate of 5.47%. What is your monthly mortgage payment? $565.91 $707.39 $6,837.50 $5,470.00 QUESTION 3 1.429 After ten years, what is the remaining loan balance on the mortgage? $53,472.29 $82,470.58 $125,618.44 $98,876.40

Answer 1

Answer to Question 1:

Value of home = $125,000

Amount financed = 80% * Value of home
Amount financed = 80% * $125,000
Amount financed = $100,000

Amount invested = Value of home - Amount financed
Amount invested = $125,000 - $100,000
Amount invested = $25,000

Answer to Question 2:

Annual interest rate = 5.47%
Monthly interest rate = 0.45583%

Time period = 30 years or 360 months

Using financial calculator to calculate monthly payment:

I = 0.45583%
N = 360
PV = -100000
FV = 0

PMT = 565.91

Monthly payments = $565.91

Answer to Question 3:

Remaining time period = 20 years or 240 months

Using financial calculator to calculate remaining loan:

I = 0.45583%
N = 240
FV = 0
PMT = 565.91

PV = -82470.58

Loan outstanding after 10 years = $82,470.58