5. Rob and Laura are buying their first home. The price is $400,000 and they plan to put20% down. Columbia Savings and Loan (CSL) will lend them the remainder at a 4.0% fixed rate for 30 years, with 3 points. Their combined student loan payment is $370.00. Annual property tax on the house is $4800 and their annual homeowners insurance cost is $984. Their combined monthly payment on their car loans is $422.00. They plan to live in the house for the next four years after which the plan to sell it and move up to a bigger house to accommodate planned increase in their family size. They anticipate closing in one month. (Ignore taxes.) Their annual household income is $80,000.

a) How much will their monthly housing cost (PITI) be? [3 pt]

b) Calculate the front-end and the back-end ratios for the CSL loan. Would they qualify for the loan under the FHA 203

(b) loan? [4 pt]

c) Newtown Lenders Inc. (NLI) is offering them $4.5%, 30-year loan with zero point. All other terms remain the same as for the CSL loan. As they plan to prepay at the end of the 4th year, which loan should they accept (CSL or NLI) and why? [5 pts]

#6(11 points)

Consider the following real estate transaction described for the settlement of a deal by a broker who is the procuring cause for the deal.

John and Jane Johnson have signed a contract to sell their home, on which they owe a mortgage balance of $13,466, to Bassey and Betsie Beacon for $375,000. Their original loan amount, taken twenty eight years ago, was $83,000 for 30 years at 8% annual interest compounded monthly. The 336^th payment due on May 1, 2020 has already been paid and the remaining loan balance will be paid at closing. The closing date has been set for June 1, 2020. The sellers will pay a 6% commission to their Century 21 broker. The buyers loan application for 95% of the value of the house at 3.6% for 30 years has been approved. The assessed value of the house is $320,000 for both land and improvements while the tax rate is 80 mills. The 2020 property tax is due in arrears on December 31, 2020 and has not yet been paid.

The following additional charges will be paid at closing by the stipulated parties. The buyers will pay title examination fee of $375, recording fees of $250, and additional legal fees of $750. The sellers will pay legal fees of $1050, appraisal fee of $500, and a well examination and certification fee of $250.

Answer the following questions in respect of the transactions enumerated above. Show your computation where necessary.

1. How much brokerage commission is owed to the broker at settlement? (2 pt)

2. Calculate the amount of property tax due on December 31, 2020. (2 pt)

3. Determine the proration of the property tax between the sellers and buyers at closing. (2 pt

4. List and sum up all items owed by the sellers at closing. (3 pt)

e. How much will the sellers take home at closing? (2 pt)

7a. The commission for selling a house is 5% of the first $10,000 and 2.5% of anything over that amount. The broker received a commission of $730. How much did the property sell for? (2 pt)

7b. Mr. and Mrs. Jones applied for a conventional $45,000 home mortgage at 13.5% for 20 years. If the down payment is 20% of the selling price, what is the selling price of the home? (2pt)