How Should the Costs of Purchasing and Owning a Home Be Categorized? You can categorize the costs associated with home ownership according to whether they are paid at closing, or monthly throughout the life of the mortgage loan, or even after the home is paid off. Consider the following situation, and then complete the form that follows by entering the necessary data, classifying the costs according to whether they represent up-front, monthly costs, or both. Finally, answer the associated questions that follow. Note: Round all dollar amounts to the nearest whole dollar, and if no payment is necessary, record a zero (0) in the space. In case of deduction, enter the dollar amount without minus sign. When Should Ji Pay Housing Costs? On April 1 of next year, Ji is purchasing a $210,000 house and has accepted the Fifth State Bank's offer of a ten-year $178,500 loan with an interest rate of 9%. He has a gross annual income of $80,000 and is concerned about how much his one-time up-front costs and recurring monthly costs will be. He's received the following data and form, but he's not certain when he is to pay each cost-at closing, monthly, or both. Your task is to help Ji by completing the form and classifying the costs. Hint: Remember that the purchase is expected to close on the first of April. This means the following: . Although a year's worth of a cost, such as the house's property taxes, may be owed by the home buyer, a portion of the total cost will be paid by the seller. A portion of a cost, such as the homeowner's insurance premium, may be deposited into an escrow account so that the accumulated funds will be available to pay the entire annual premium when it is due next year. For its mortgage, the bank will permit a 15% down payment but will also require 2 points. Mortgage insurance is required if the loan- funds will be available to pay the entire annual premium when it is due next year. For its mortgage, the bank will permit a 15% down payment but will also require 2 points. Mortgage insurance is required if the loan- to-value (LTV) ratio is less than 20%. A private mortgage insurance (PMI) policy, if necessary, is expected to cost $714 per year, but is distributed 12 times per year. Ji has purchased a home warranty policy, which carries an annual premium of $480 and is paid 12 times per year, and a homeowner's insurance policy, which costs $2,100 per year. Premiums for these two policies are paid to the respective insurance companies from an escrow account at the bank. Credit report fee: $50 Title search and deed recording fee: $375 Loan origination fee: $1,050 Title insurance policy-Lender: $420 Mortgage payment (principal and interest): $2,261 Appraisal and survey fees: $450 Attorney fees: $1,000 . Home, termite, and radon Inspections: $525 Title insurance policy-Homeowner: $470 Messenger and document fees: $235 Property taxes on the house: $10,500 per year The property taxes and homeowner's policy should be pro-rated. BAIRROLLMERS PARRILL Amount Paid Cost Incurred At Closing Monthly $ $ $ $ $ $ Using the given information, what is the loan-to-value (LTV) ratio required by the Fifth State Bank? 85.00% O 15.00% O 117.65% of monthly income. Ji's total closing costs are of his mortgage, and his monthly costs are