Question
See this question to help with the one below (Part 2): https://www.chegg.com/homework-help/questions-and-answers/see-question-help-one-part-1-https-wwwcheggcom-homework-help-questions-answers-part-1-inve-q90155694 Part 3 Homeownership Finally, the time has come for Andrea to purchase her
See this question to help with the one below (Part 2): https://www.chegg.com/homework-help/questions-and-answers/see-question-help-one-part-1-https-wwwcheggcom-homework-help-questions-answers-part-1-inve-q90155694
Part 3 Homeownership
Finally, the time has come for Andrea to purchase her first home. After months of searching she has finally found her dream home - a cozy 3-bedroom/2-bathroom Cape Cod. The seller accepted her offer of $150,000, contingent upon Andreas ability to qualify for a mortgage. Taxes for the house run $5,400 per year and the annual cost of insurance is 0.5% of the assessed value of the home. For the sake of simplicity, we assume that the assessed value is equal to Andreas offer: $150,000. In order to purchase the home Andrea must pay a 10% down payment. She is planning on using the money from her investment (Part 1) to pay for the down payment.
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Show whether or not she will have enough money from her investment to pay the down payment.
- Looking further into the mortgage process, Andrea is exploring a 25-year mortgage with an APR of 4.0% or a 30-year mortgage with an APR of 4.5%. Neither mortgage option charges points. Use the Monthly Principal and Interest Payment per $1000 of Mortgage Table found in the Consumer Math block in Lumen to answer this question.
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What would Andreas monthly payments, including principal, interest, taxes, and insurance be on each mortgage?
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How much interest would Andrea pay over the life of each mortgage?
Andrea has recently received a 10% raise at work, but still has eight years left on her school loans ($295.87 per month) and two years left on her car loan. She also has a monthly cell phone bill of $70 and a monthly cable bill of $85. The mortgage company she plans to use, Coastal Banking and Loan, requires that Andrea is able to cover the cost of the mortgage, taxes, and insurance with 28% of her adjusted monthly income.
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Does Andrea qualify for either of the two mortgage options?
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Based on your work with Andrea and her finances what would you recommend that Andrea do? Should she apply for the 25-year mortgage, apply for the 30-year mortgage, find a cheaper house, continue to rent, or do something else? Justify your reasoning.
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