Please answer questions 5 thru 12 and explain 07 Dr. Gary Winek Name: CSM 2360 D
ID: 2614057 • Letter: P
Question
Please answer questions 5 thru 12 and explain 07 Dr. Gary Winek Name: CSM 2360 Date Due Owner Financing Worksheet on to www.mocase101.om and determine the monthly mortgage amounts (PI only) per $1,000 been provided in the chart below borrowed for the following interest rates and terms. Two examples have 20 Years 30 Years 6.60 Directions: In a neat and organized manner, work each problem in the space provided below or on a separate sheet of paper stapled to the back of this worksheet. Bank A's Lending Rules: 28/36 Housing/housing plus long term debt Loan/down payment ratio 80/20 Problem Set 1: Based on a couple earning $90,000/year 5 000 to ,000 1) What general price range should the couple consider? 100 2) What is the maximum monthly payment the couple can afford per month for housing? ,700 3) What is the maximurn the couple can afford for housing and other long term debt? ,600 4) How much money would the couple have left for housing if they have car payments of $500/month, school loans of $350/month and $250/month minimum credit card payments? Calculate the selling price of a home by using the monthly allowance calculated in question 2 for the couple, a 30-year, 7% mortgage, taxes and insurance costing $36/msl,000 of assessed home value and a 80/20 loan. 5) Calculate the selling price of the above home using the information in question 5 and a 7%, 15 year mortgage. 6) 7) Calculate the home selling price they can afford, using the information in question 5, but the housing allowance calculated in question 4Explanation / Answer
1.
as per 28/36 rule household can spend maximum of 28% of its gross total monthly income on housing and should not exceed 36% of its total gross total income if housing combined with debt.based on that
range will be $90,000 (28/36) $25200 - $32400
2.
per year they maximum can spend for housing as per above (for 12months) - $25200
max they can spend per month - $25200/12 - $2100
3.. per year they maximum can spend for housing and longterm debt as per above (for 12months) - $32400
max they can spend per month - $32400/12 - $2700
4.
total house and long term maximum monthly limit as per above = $2700
less debt:-
carloan - $500
school loan - $250
credit card - $350
total - ($1100)
max balance for monthly housing $1600
5.
max housing amount as per 2 per annum $25200
future value = present value (1 + rate of interest) number of years
insurance per 1000$ per year = 36$
for 25200$ = 25200/1000 *36 = 907.2 per year
based upon above = 25200(1 + 0.07)30 = 191828$
add:-
insurance and taxes paid
(assumed it is recovered in selling price )
907.2 (1.07)30 = 6903$
total selling price = 198731$
6.
above 5 solved using no.of years = 15
mortgage rate = 7%
future value = 25200 (1.07)15 = 69527$
insurance paid future value = 907.61 (1.07)15 = 2504$
total selling price will be = 72031$
7.
the max limit they can afford based on 5 limit
max amount per year =19200$
for 30years
interest 7%
they can afford = 19200$ (1.07)30 = $146112
8.
considering 7 land cost will be 18% of selling price = 26300$
9.
considering 8 amount remains will be 7. less 8. = $119812