A person was considering buying a house priced at $300,000. A mortgage company c

Question

A person was considering buying a house priced at $300,000. A mortgage company claimed the interest rate for the 20 year loan is 3.75%. The company also estimated that the points and Appraisal, Credit Report, Processing, Document Preparation, Administration, Underwriting, Flood Certificate, Tax Service, Wire Transfer, and other fees would be $10,000 in total.

A. What would the monthly payment, if the person decided to borrow 90% of the cost of the house and 100% of the processing fees?

B. What is the APR of the loan?

C. If the person accepts the terms of the loan on Feb. 28, 2010, the first monthly payment is due on March 31. How much mortgage would be paid off after the payment on May 31, 2011?

D. How much interest charge could this person claim for deduction in the 2011 Tax Return, i.e. the total interst occur during year 2010?

PLEASE BE AS DETAILED AS YOU CAN! THANKS!

Explanation / Answer

You know, it is nearly impossible to answer this well without substantially more information. Let me ask YOU: First, why such a low score? What is keeping it at that very low level? Are you really ready to buy a house? Have you considered all the additional expenses and responsibilities that come with owning a home? Are you saving money for a down payment? Have you been paying rent that might be similar or more than a mortgage payment and still putting some savings away?

Having a cosignor with perfect credit can help you qualify for a loan, but credit scores are critical. Yours will be considered as much as your cosignor

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