11 & 12

Calculating monthly mortgage payments. Find the monthly mortgage payments on the follow What's the best source of information about available housing in your community? The answer ist purchase of the most suitable property at the best price. However, there's another readily availab well-informed professional real estate agent whose business is helping buyers find and negotiate the source of information: the local newspaper-in paper or online. Almost anything you want to knor -P 184 principal and interest components of a fixed-late What are the implications of this change? 8 P. 184 a . 184 9 194 99 ing mortgage loans using either your calculator or the table in Exhibit 5.8 $80,000 at 6.5 percent for 30 years b $105,000 at 5.5 percent for 20 years $95,000 at 5 percent for 15 years the amount that they can afford to spend on their first home. They have a combined annual income Home affordability analysis. Use Worksheet 5.3. Selma and Rodney Jackson need to calculate of $47,500 and have $27,000 available for a down payment and closing costs. The Jacksons og mate that homeowner's insurance and property taxes will be $250 per month. They expect the mortgage lender to use a 30 percent of monthly gross income) mortgage payment affordability ratio, to lend at an interest rate of 6 percent on a 30-year mortgage, and to require a 15 percent down payment. Based on this information, use the home affordability analysis form in Workshee 5.3 to determine the highest-priced home that the Jacksons can afford. 10. Estimating closing costs on home purchase. How much might a home buyer expect to pay in closing costs on a $220,000 house with a 10 percent down payment? How much would the home buyer have to pay at the time of closing, taking into account closing costs, down payment, and a loan fee of 3 points? 11 Conventional vs. ARM mortgage payments. What would the monthly payments be on a $150,000 loan it the mortgage were set up as A 15-year, 6 percent fixed-rate loan? b. A 30-year ARM in which the lender adds a margin of 2.5 to the index rate, which now stands at 4.5 percent? Find the monthly mortgage payments for the first year only. 12. Adding to monthly mortgage payments. What are the pros and cons of adding $100 a month to your fixed-rate mortgage payment? 13. Refinancing a mortgage. Use Worksheet 5.4. Latha Yang purchased a condominium four years ago for $180,000, paying $1,250 per month on her $162,000,8 percent, 25-year mortgage. The current loan balance is $152,401. Recently, interest rates have dropped sharply, causing Latha to consider refinancing her condo at the prevailing rate of 6 percent. She expects to remain in the condo for at least four more years and has found a lender that will make a 6 percent, 21-year, $152,401 loan requiring monthly payments of $1,065. Although there is no prepayment penalty on her current mortgage, Latha will have to pay $1,500 in closing costs on the new mortgage. She is in the 15 percent tax bracket. Based on this information, use the mortgage refinancing analysis form in Worksheet 5.4 to determine whether she should refinance her mortgage under the speo fied terms a. 9 ing Personal Finance How's Your Local Housing Market? about the local housing scene con