1. Points represent: A. 2% of the amount of the loan B. Monthly payments C. An a
ID: 2446497 • Letter: 1
Question
1. Points represent:
A. 2% of the amount of the loan
B. Monthly payments
C. An additional cost of receiving the mortgage
D. 3% up-front payment
E. None of these
2. Ben Brown bought a home for $225,000. He put down 20%. The mortgage is at 6
½ % for 30 years. Using the table in the handbook, his monthly payment is:
A. $1,319.04
B. $1,319.40
C. $1,216.80
D. $1,139.40
E. None of these
3. Chin Woo bought a home for $160,000. He put down 20%. The mortgage is at 8 1/2% for 25 years. Using the table in the handbook, his yearly payments are:
A. $1,238.00
B. $12,380.16
C. $12,830.61
D. $12,380.61
E. None of these
4. Stu Reese has a $150,000 7 ½% mortgage. His monthly payment is $1,010.10. His first payment will reduce the principal to an outstanding balance of:
A. $149,729.40
B. $149,927.40
C. $72.60
D. $149,910.40
E. None of these
5. Abe Aster bought a new split level for $200,000. Abe put down 30%. Assuming a rate of 11 1/2% on a
30 year mortgage, Abe's monthly payment is (use the table in the handbook):
A. $1,423.80
B. $1,387.40
C. $1,367.80
D. $1,982.00
E. None of these
Explanation / Answer
1. Points represent:
C. An additional cost of receiving the mortgage
Note : points represent an extra expenditure incurred a the time of recieving the loan
2. Ben Brown bought a home for $225,000. He put down 20%. The mortgage is at 6
½ % for 30 years. Using the table in the handbook, his monthly payment is:
Loan Amount = Purchase price - Down Payment
Loan Amount = 225000 - 20%*225000
Loan Amount = $ 180000
monthly rate = 61/2 % * 1/12 = 0.54167%
NPER = 30*12 = 360
Monthly Payment = Loan Amount / PVIFA(rate,nper)
Monthly Payment = 180000/PVIFA(0.54167%,360)
Monthly Payment = 180000/157.9779
Monthly Payment = $1,139.40
Answer
D. $1,139.40
3. Chin Woo bought a home for $160,000. He put down 20%. The mortgage is at 8 1/2% for 25 years. Using the table in the handbook, his yearly payments are:
Loan Amount = Purchase price - Down Payment
Loan Amount = 160000 - 20%*160000
Loan Amount = $ 128000
monthly rate = 8.5%
NPER = 25
Yearly Payment = Loan Amount / PVIFA(rate,nper)
Yearly Payment = 128000/PVIFA(8.5%,25)
Yearly Payment = 128000/10.2342
Yearly Payment = $ 12507.33
Answer
E. None of these
4. Stu Reese has a $150,000 7 ½% mortgage. His monthly payment is $1,010.10. His first payment will reduce the principal to an outstanding balance of:
Interest in 1st Payment = 7.5%*150000*1/12 =937.50
Principal paid in 1st payment = 1010.10 - 937.50 = 72.60
After first paymnet ,
Outstanding Principal balance = 150000-72.60
Outstanding Principal balance = 149,927.40
Answer
B. $149,927.40
5. Abe Aster bought a new split level for $200,000. Abe put down 30%. Assuming a rate of 11 1/2% on a
30 year mortgage, Abe's monthly payment is (use the table in the handbook):
Loan Amount = Purchase price - Down Payment
Loan Amount = 200000 - 20%*200000
Loan Amount = $ 160000
monthly rate = 11.5 % * 1/12 = 0.9583%
NPER = 30*12 = 360
Monthly Payment = Loan Amount / PVIFA(rate,nper)
Monthly Payment = 160000/PVIFA(0.9583%,360)
Monthly Payment = 160000/100.9804
Monthly Payment = $ 1584.47
Answer
E. None of these
Answer
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