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Personal Finance

# Personal Finance - percent of the sales price and a 20...

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Karina Santana October 19, 2011 Chapter 8 HW Question 3: Use the lending guidelines to determine the maximum dollar amount that he could spend per month on his home payment (PITI). By using the lending guideline I determined that the maximum dollar amount that he could spend per month is \$ 1,195.00 Question 4: Calculate Seyed’s monthly PITI payment. To calculate principal and interest (PI) assume he has purchased a home for \$140,000 and has a \$112,000, 30-year, 8 percent fixed-rate mortgage. To calculate the local real estate taxes (T) use the real estate tax rate as given in the case, assuming the property has an assessed value of \$128,000. Also include Seyed’s projected homeowner’s insurance (I) cost as given in the case. PI= 112,000*8%*30=821 T=128,000/100*.91=164.8 I=275 Monthly payments=857.48 Question 6: Seyed is now considering a house that is selling for \$180,000. Estimate the dollar amount Seyed should be prepared to pay on the day of closing. Assume an interest rate of 9 percent, closing costs of 5
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Unformatted text preview: percent of the sales price, and a 20 percent down payment. House=180,000 Down payment= 36,000 Points=3,600 Loan origination fee=1,800 Loan application fee=300 Appraisal fee =200 Title search fee=500 Attorneys fee=400 Recording fee=20 Credit report=50 Termite and radon inspection fee=150 Notary fee=50 TOTAL INITIAL COST=\$43,070.00 if you do 5% closing cost is \$45,000 Question 7:Assuming the house in question 6 is appraised, for \$180,000 and the information in the case concerning the taxes and insurance holds true, can Seyed afford the home if he finances it for 15 years? 20 years? 30 years? Why or why not? No, because the most money that he is authorize to take out is \$162,850.91 Question 8: Will Seyed need private mortgage insurance? Will he need a gift letter? Yes, because there might be a likely hood that he will default on his payments. A gift letter will be needed if someone is willing to give him money to purchase the home....
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