Please answer and explain questions 5 through 12. Please answer all questions an
ID: 2614077 • Letter: P
Question
Please answer and explain questions 5 through 12. Please answer all questions and determine the monthly mortgage amounts (PI only) Directions: Log on to www.mortgagRe borrow ed for the following interest rates and terms. Two examples have been provided in the chart below. 30 Years 5% , 36 6% 45.99 20 Years 6.60 90 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 80/20 Loan/down payment ratio Problem Set 1: Based on a couple earning $90,000/year ?25,0 CO to 310 .000 1) What general price range should the couple consider? 2100 2) What is the maximum monthly payment the couple can afford per month for housing? 700 3) What is the maximum the couple can afford for housing and other long term debt? T6O04) How much money would the couple have left for housing if they have car payments cf $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/yr/$1,000 of assessed home value and a 80/20 loan. 5) Calculate the selling price of the above home using the information in question 5 and a 7%, 15 year mortgage. 6) Calculate the home selling price they can afford, using the information in question 5, but the housing allowance calculated in question 4. 7)Explanation / Answer
28/36 Rule of laon states :a maximum of 28% of its gross monthly income on total housing expenses and no more than 36% on total debt service, including housing and other debt such as car loans.
80/20 rule of loan explain : a maximum of 80% of total property value can be borrowed as housing debt .
Answer 1) General price range for property : 225000 and 270000
Answer 2) Maximum for housing /month = (90,000 * 28% )/ 12 =$ 2100
Answer 3) Maximum for housing and other debt = (90,000 * 36% )/ 12 = $2700
Answer 4) Money left for housing = $2700 - ( $500 + $350 +$250) =$1600
Answer 5) yearly out flow for 30 years loan @7% /$1000
= (6.65*12) + tax and insurance = $ 115.80 per $ 1000
Total loan amount = (Maximum for housing /year / $ 115.80)*1000 = ($25200/ $115.80 ) * 1000 = $ 217616.58
Price of property ( as per 80/20 rule) = 272020.73 = $ 272021
Answer 6)
yearly out flow for 15 years loan @7% /$1000
= (8.98*12) + tax and insurance = $ 143.76 per $ 1000
Total loan amount = (Maximum for housing /year / $ 143.76)*1000 = ($25200/ $143.76 ) * 1000 = $ 175292.15
Price of property ( as per 80/20 rule) = $ 175292.15/80% = $ 219115.19= $ 219115
Answer 7)
early out flow for 30 years loan @7% /$1000
= (6.65*12) + tax and insurance = $ 115.80 per $ 1000
Total loan amount = (Maximum for housing /year as per question 4 / $ 115.80)*1000 = ($19200/ $115.80 ) * 1000 = $ 165803.11
Price of property ( as per 80/20 rule) =$ 165803.11/80% = 207253.89 = $ 207254
Answer 8)
land cost = $ 272021 * 18% =$ 48963.78
Answer 9)
money for structure = $ 272021 *( 100- 18)% = $ 223057.22
Answer 10)
Amount for AC sq feet = 223057.22 - ( 20,000+10,000+15,000) = 178057.22
Total sq ft area = 178057.22/ 90 = 1978.41 sq ft
Answer 11)
Loan amount = $ 217616.58 ( as calculated in question 5)
Answer 12)
Down payment = Property price - loan
= $ 54404.15