Lucinda Lacy purchased a foreclosed house today for $105,500 by making a down pa
ID: 1219766 • Letter: L
Question
Lucinda Lacy purchased a foreclosed house today for $105,500 by making a down payment of 15% of the purchase price and paying closing costs of:
Loan origination fee 1.7% of purchase price
Appraisal fee $325
Survey fee 210
Attorney’s fee 420
Processing fee 300
Escrow fee 240
Other miscellaneous costs 620
Lucinda has a mortgage loan with an interest rate of 3.9% APR, compounded monthly for 30 years. Her taxes and insurance are $375 per month. Lucinda has an estimate for a contract for $8,500 firm, fixed price to remodel the house and this expense will be equally distributed over the period of her ownership. After remodeling, she estimates that she could sell the house for $135,000. Her selling expenses would be 7% sales commission plus $1000.
FInd the value of the loan payoff?
Explanation / Answer
Total value of loan payoff means: The total amount of money that Lucinda lacy will pay at the end of the tenure of the loan i.e. 30 years.
Loan origination fee = 1.7% x $105,500 = $1,793.50
Appraisal fee = $325.00
Survey fee = $210.00
Attorney’s fee = $420.00
Processing fee = $300.00
Escrow fee = $240.00
Other miscellaneous costs = $620.00
Down Payment = $105,500 x 15% = $15,825.00
Installments to be paid on loan amount = $105,500 (1 - 15%) = $89,675 at Rate = 3.9%/12 = 0.32% and NPER = 30 years x 12 months = 360 periods
Payment each month(PMT) = $422.97 (calculated using PMT excel formula)
Payment made for 360 months = 152,269.2
Total loan payoff value = 172,002.7 (adding all figures above)
Taxes and insurance are paid over and above this amount each month.
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