Question
After renting an apartment in North York for many years, Monica and Chandler have decided to buy a house close to their favourite park, Westchester
After renting an apartment in North York for many years, Monica and Chandler have decided to buy a house close to their favourite park, Westchester Park in Brampton, Ontario. They plan to take many walks on the adjacent Hartford trail with their two young children, Erica and Jack. They have saved $220,000 towards a down-payment. Monica and Chandler have made an offer of $940,000 with a condition that financing can be obtained. This offer was accepted by the seller. The happy couple have approached their Canadian lending institution, Citibank, for financing. An appraisal of the house, conducted by Citibank, was $880,000. The property tax rate in Brampton is 0.9% and the heating cost for the modest 3-bedroom, 1,800 square feet home is estimated to be $2,200 for the year. The happy couple have elected to obtain a variable monthly mortgage with a term of 5 years, amortized over 25 years, compounded semi-annually. The rate the bank would offer is 70 bps below prime. The prime rate is currently at 2.45%. Monica is self-employed as a chef in a number of restaurants in the trendy area of downtown Brampton and earns a gross income of $120,000. Chandler is transitioning from his career in statistical analysis and wants to pursue a career in either paleontology or acting. During this transition time he is a stay-at-home father for Erica and Jack. Monica drives to work in their used Honda Odyssey with monthly car payments of $700 per month. Also, Monica has a small student loan of $10,000 remaining from when she attended the Culinary Institute of Canada. Her monthly payment is $500
2) What the Loan to Value (LTV) in percentage? 3) Calculate what would be the monthly mortgage payment?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started