A. Refer to Narrative 14-2. Lynn Albright is applying for a 30-year, 9 1/4% mort
ID: 2742407 • Letter: A
Question
A. Refer to Narrative 14-2. Lynn Albright is applying for a 30-year, 9 1/4% mortgage. She can handle payments of principal and interest of $372 per month. What is the maximum amount of dollars she will qualify to borrow?
B.Refer to Narrative 14-2. Isabella is purchasing a home for $150,000. The down payment is 15% and the balance will be financed with a 25-year mortgage at 8% and 2 discount points. Isabella made a deposit of $10,000 (applied to the down payment) when the sales contract was signed. Isabella also has these expenses: credit report, $60; appraisal fee, $130; title insurance premium, 1% of amount financed; title search, $200; and attorney's fees, $400. What is the amount due at the closing?
Explanation / Answer
For the second question, Isabella pays a deposit of $10,000; however she is required to pay a down payment of 15% x $150,000 = $22,500. Also, we do not know the monthly installment for the loan. Lastly, it is not clear whether she will pay the additional expenses herself or will she finance it. I am also not sure what is 2 discount points.
N 360 12*30 I/Y 0.77% 9.25%/12 PMT $372 FV 0 PV $45,218.32 PV(0.77%,360,-372,0)