Need help with questions 8-14 but all the information in the text is needed for the questions that I need help with

You currently live (rent free) in your parents' basement but it's a bit awkward when you bring dates home. Your friends are looking for a new roommate and have asked if you're interested in moving in. Your share of the rent (which includes all utilities) will be $1,000 per month, due at the beginning of the month, and you will be signing a three-year lease. You parents think you should save your money so you can buy a house when you graduate in three years. If you stay living in your parents' basement, and deposit the money you save by not having to pay rent into a savings account at the beginning of each month, your parents have offered to give you a gift equal to the amount you have saved towards a down payment on your first home. Assume the bank is offering a 5% annual interest rate, compounding monthly, on new savings accounts.

1. Your monthly rent payment in this example would be considered _________________. A) an ordinary annuity B) an annuity due C) amortization D) a perpetuity

2. If you take your parents up on their offer, how much will have (in total) for a down payment on a home when you graduate? Round your final answer to the nearest whole dollar. * Hint: remember your parents have offered to match what you save on your own. A) $36,000 B) $38,915 C) $77,507 D) $77,830

3. Suppose you took your parents up on their offer and are now getting ready to graduate. You have decided that you can afford a house payment of $1,200 per month. You received quotes from several lenders and determined that the most likely annual interest rate you will be offered is 4.75% for a 30 year, fixed rate mortgage. What is the maximum you can pay for a house? Round to the nearest whole dollar. Hints: (1) Mortgage payments are in arrears (meaning they are paid at the END of the time period). Be sure your calculator is in the correct mode before solving. (2) After you solve for the maximum loan amount, don't forget to add on your down payment to determine the sales price! A) $230,041 B) $269,866 C) $307,870 D) $308,780

4. Would you be required to pay PMI with this loan? A) Yes B) No

Use the following to answer questions 5-7. You have selected the lender you will be using and completed the application process. You are excited to find out that your credit score was better than you originally thought when estimating how much you could spend on a house. You are being offered a lower interest rate than you were originally quoted on two different loan options. Both are 30 year, fixed rate mortgages with payments of $1,000 per month and origination fees equal to 2% of the loan amount. * hints (1) Assume these loans have zero PMI (2) you have additional money set aside to cover closing costs so you are using the full amount from #2 as a down payment. Loan A has an APR of 4% with no points. Loan B has an APR of 3.90% with 1.5 points

5. What is your EBC if you select Loan A? Enter your answer as a whole number with 3 decimal points (no percent sign).

6. What is your EBC if you select Loan B? Enter your answer as a whole number with 3 decimal points (no percent sign).

7. Assuming you intend to stay in the house for 30 years, which loan should you choose? *hint: Answer using the calculations you did in questions 5 and 6 rather than relying on the "rule of thumb" about EBC and loan choices presented in the text and on the slides. A) Loan A B) Loan B Answer the remaining questions assuming you opted for Loan A.

8. You decide to rent out a room in your new home to your best friend for $500 per month. If you add the extra money to your monthly house payment, how many years will it take you to pay off your mortgage? A) 15.69 years B) 17.72 years C) 30 years D) 158 years

Use the following to answer questions 9-12. Five years later, you are offered your dream job in Costa Rica. You need to sell this house in order to purchase a new one where you are moving. Rents have increased since you purchased the home and you estimate that the home will rent for $1700 per month (net). You have found a high quality tenant willing to sign a five year lease under the following conditions. Rent will be $1,700 for the first three years, and increase to $2,000 for the remaining two years. The average investor's holding period on residential rental properties is five years. You have estimated sale proceeds will be $339,427 at the end of the investor's holding period. The appropriate discount rate is 4.25%.

9. What is the minimum price you should list the property for (i.e. the maximum an investor would be willing to pay)? Round up to the nearest whole dollar. *Remember, the value of an investment property comes from its cash flows. That is, you need to consider both the estimated proceeds at the end of the holding period AND the stream of cash flows the investor will receive from rent while they own the property.

10. What will the investor's "going-in" IRR be if they pay exactly list price? Round to two decimal places.

11. Assume you have been making payments of $1,000 per month. You will close on the home after making your last payment in year 5. How much will your loan payoff amount be (in other words, what is the outstanding balance on your loan after 5 years)? Round to the nearest whole dollar.

12. Assuming you sell the home for exactly list price, pay a 6% real estate broker commission and $4,500 in Seller closing costs, what will be your net proceeds from the sale? Round to the nearest whole dollar. *don't forget to include your loan payoff amount!

Use the following to answer questions 13-14. You are starting to have second thoughts about moving. After going back and forth for several weeks you decide that you will make a decision based on whether or not you will refinance the house. If you refinance you will stay, if you don't you will move. You can refinance the home with a new interest rate of 3.75% for a 30 year term. You will refinance on the same day you would have closed on the home (so you can use the outstanding loan balance you calculated in #11 here). The cost of refinancing is 4.8% of the loan amount. Assume you anticipate selling the home (or refinancing again) in 7 years.

13. What is the net benefit of refinancing? Round to two decimal places. *Hint you are solving for net benefit of refinancing, not solving for NPV (so you do not need a discount rate to answer this question).

14. Will you be moving to Costa Rica? A) Yes B) No