How Should the Costs of Purchasing and Owning a Home Be Categorized? You can categorise 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 poid off. Consider the following situation, and then complete the form that follows by entering the necessary data, classifyng 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 sion. When Should Hi Pay Housing Costs? On April 1 of next yeac, th is purchasing a $150,000 house and has accepted the Tenth National Bank's offer of a ten year $124,500 loan with ae interest rate of 7%. He has a gress annual income of $100,000 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 31 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: - Athough a year's worth of a cost, such as the house's property taxes, may be owred 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 avalable to poy the entire annual prethium when it is due next vear. - For its miortgage, the bank will permit a 17% down payment but will also require 4 points. Mortgage insurance is recuired if the loanto value (ITV) ratio is less than 20%. - Although a year's worth of a cost, such as the house's property taxes, may be owed by the horrie 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 avalable to pay the entire annual premium when it is due next year. - For its mortgage, the bank will permit a 17% down payment but will also require 4 points. Mortgage insurance is reguired if the loanto-value (tTV) ratio is less than 20%. - A private mortpage insurance (PM1) policy, if necessary, is expected to cost $498 per year, but is distributed 12 times per year. - Ji has purchased a home warranty policy, which carris an annual premum of $480 and is paid 12 tames per year, and a horneowner's insurance policy, which costs $1,500 per year. Premiums for these two policies are paid to the respectwe insurance companes from an escrow account at the bank. - Credit report feet 585 - Title search and deed recording fee: $300 - Loan originotion feer $900 - Tide insurance policy-Lender: $375 - Mortgage payment (principal and interest): $1,443 - Appraisal and survey leesi $600 - Atrorney fees: $750 - Home, temite, and radon inspectoonsi $575 - Tale insurance policy-Homeowner: \$450 - Messenger and document feesi $315 - Property takes on the house: $7,500 per year - The property taxes and homeowner's policy should be pro-rated. Ch 09: Assignment - Obtaining Affordable Housing Using the given information, what is the loan-to-value (LTV) ratio required by the Tenth National Bank? 17.00% Ch 09: Assignment - Obtaining Affordable Housing Using the given information, what is the loan-to-value (LTV) ratio required by the Tenth National Bank? Using the given information, what is the loan-to-value (ITV) ratio required by the Tenth National Bank? 17.00% 120.48% 83.00% J's total closing costs are of his mortgage, and his monthly costs are of monthly income
