If the couple were to get a conventional loan, what would their cost be using the price of home and figures for figuring taxes and insurance. You will need to use a mortgage calculator. You can find them by asking Google or in one of the files in this module's content area. Show your figures.

here goes some previous figures

1.Tom and Nancy want to buy a house in a particular neighborhood. they have two children ages 1 and 4. The average price home in this neighborhood runs about $350,000. Together their family income is $100,000. They have saved $75,000. The home they want to purchase costs $300,000. Taxes on the home run $3.00 per $100 of assessed value of the home. For new homes the assessed value is equal to 75% of the purchase price. Insurance runs half of one percent of the purchase price of the home. An Adjustable Rate Mortgage (ARM) requires a 10% down payment. Conventional loans require 20% down payment.

Interest for an ARM currently is 4.5 %. The conventional loans are 5.25% today.

Compute the per month cost including interest, taxes and insurance (use above formula to get the taxes and insurance cost) for a ARM.

Show your work: (25 points)

downpayment = 20% of purchase price = 20% of 300,000 = $60,000

The cost of insurance = 1/2 of 1% of purchase price

= 1/2 * 1% of 300,000 = $1500 per year , so per month = 1500/12

= $125

Taxes = $3 per $100 of assessed value = 75% of purchase price

So, assessed value = 75% of 300,000 = $2,25,000

So, per 100 dollar = 2250 * 3 = $6750/year

So, monthly taxes = 6750/12 = $562.5

So, the principle and interest per month will depend on the loan term = 30 years = 360 months generally.

So, if principal = 300,000 - downpayment = 300,000- 60,000 = $240,000

So, interest = ARM interest of principal amount = 4.5% of principal

So, interest = 4.5%/12 months = 0.375% = 0.00375

So, monthly principal and interest payment = M

M = 240,000[0.00375(1+0.00375)^360/((1+0.00375)^360)-1]

= 240,000 * [0.014428/(3.847698-1)]

M = $1215.97

So, total monthly payment = principal + interest + taxes + insurance

= $ (1215.97 + 562.5 + 125)

= $1903.47