Question;

You just acquired a house and based on the mortgage term you will pay $13,306.05 per month for 30 consecutive years. You will assume the following:

a) The contractual annual rate is 7%

b) The Bank required a 20% down payment

Questions to answer (Calculate the Value of the House by answering the questions below):

(1) What is the present value of all the mortgage payments

(2) Calculate the value of the House

(3) Calculate the Value of the Down Payment

answer

watching

132

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Tod ThielLv2

28 Sep 2019

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

Buying a House

2) After you've been working five years, you decide to buy a house. As a rule of thumb, your house payments should not exceed 25% of your gross pay. Based on your annual salary during your sixth year on the job $42, 543, what is the maximum amount you could afford in the house payments per year?

3) Calculate the maximum house payment you could afford per month?

4) Assume you will qualify for an 8%, 30-year conventional mortgage. How much could you borrow based on the maximum monthly payment you can afford? (8% compounded monthly)

5) Lenders often expect that you have 20% of the value of the house as a down payment. Assume that you will be able to make a 20% down payment. What is a total cost of the house you could afford? The total cost is equal to the mortgage plus the down payment. (HINT: Use algebra. You want to calculate 20% of the value of the house, not 20% of the amount you are financing.)

6)What is the amount you would pay for for this house over the 30-year mortgage with monthly payments? Don't forget to include the down paument. (In the words, how much total cash will you be paying for this house - not taking into account the time value of money?)

7) How large would your monthly payments be if you could qualify for a 2-year mortgage at 8% compounded monthly (for the same amount you could borrow based on your calculations in question 4)?

copperox813

Make a comparison between two investment choices, based on theinformation given below.

Investment opportunity one: investing in stock market. Fiveyears ago, SP500 stock index was 1312. Currently, it is 2618.97.What is the average annual rate of return of SP500 stock index inlast five years?

Investment opportunity two: Five years ago, someone used her$40,000 saving to make a down payment for a townhouse in RTP. Thehouse is a three-bedroom townhouse and sold for $200,000 when shebought it. After paying down payment, she financed the house byborrowing a 30-year mortgage. Mortgage interest rate is 3.625%.Right after closing, she rent out the house for $1,650 per month.In addition to mortgage payment and rent revenue, she listed thefollowing information so as to figure out investment return:

1. HOA fee is $75 per month and due at end of each year

2. Property tax and insurance together are 3% of house value

3. She has to pay 10% of rent revenue for an agent who managesher renting regularly

4. Her personal income tax rate is 20%. While rent revenue istaxable, the mortgage interest is tax deductiable. She has to makethe mortgage amortization table to figure out how much interest shepaid each year

5. In last five years, the market value of the house hasincreased by 3.87% per year

6. If she wants to sell the house today, the total transactioncost will be 5% of selling price Given the above information,please calculate the internal rate of return (IRR) of thisinvestment in house.

SHOW CALCULATIONS AND FORMULA USED IN EXCEL ONLY

cerisegoat49

You have just sold your house for 1,100,000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of 800,000. The mortgage is currently exactly 18.5 years old, and you have just made a payment. If the interest rate on the mortgage is 7.75% APR, how much cash will you have from the sale once you pay off the mortgage?

Weekly leaderboard

Home

Homework Help 3,900,000

Finance 370,000