You are about to purchase your first home. The price of the house is $180K, the

Question

You are about to purchase your first home. The price of the house is $180K, the annual property taxes are estimated at $2,400 and the casualty insurance is estimated at $1,800 per year. You are estimating $3,800 in closing fees and expect to get a 30 year fixed rate mortgage for a fixed 4.0% with 1 point. You have $18k (10%) to put down on the home (plus any points and closing fees). Assume taxes and insurance remain constant for the duration of the loan. Your PMI payment is $200/month and will be needed for the first 4 years. Optionally, to avoid PMI by putting down 20%, you can borrow another $18k from your uncle Vini and pay him back at 10% interest (non tax deductible) for 4 years. You are in a 35% tax bracket.

a. How much cash would you need to have up front in order to get this loan (i.e. closing costs and 10% down payment).

b. What is your monthly house payment assuming that you only pay 10% down (include all costs)?
First 4 years___________
Next 11 years___________

c. What is your monthly house payment assuming that you borrow money from uncle Vini (include the cost of that loan as well).
First 4 years_________
Next 11 Years_______________

Explanation / Answer

Money needed up front: Closing costs: $3,800 10% D.P.: $18,000 Mort Pts: 1,000 Total = $22,800 Monthly payment: 10% down Insurance + Property Taxes = $4,200 a year of $350 a month PMI = $200 a month Mortgage payment for 30yr loan at 4% for $162,000 = $773 a month 350+200+773= $1,323 for first 4 years 350+773= $1,023 for next 11 years Monthly payment: 20 %down Mortgage payment 30 years fixed at 4% of $144,000 = $687 a month $18,000 monthly payment at 10% interest = $457 a month Property taxes and insurance = $350 a month Payment first 4 years = 687+457+350 = $1,494 Payment next 11 years = 687 + 350 = $1,037

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.