Mortgages and Taxes Assignment You are purchasing a business building valued at

Question

Mortgages and Taxes Assignment You are purchasing a business building valued at $??5,000 You can find a mortgage at 5% if you can put 20% down You believe' your business can support a S1 (XX) a month mortgage payment (not including taxes and insurance) Should you select a ?5 year mortgage or a 30 year mortgage? Tell your reasons If your yearly taxes for the building will be $2,500 and the insurance for the will be $1,900 per year, what will the total of the PIT I for the mortgage be? Compute what the unpaid principal balance will be after you've made three payments on the mortgage What will the new annual taxes on the property be if the assessed valuation is 60% of purchase price and the new tax rate is 1 90 per S100 of assessed valuation?

Explanation / Answer

building purchase price = 225000

down payment = 20% = 45000

loan amount = 180000

using PMT function in excel monthly payment of 25 year mortgage

=PMT(5%/12,300,180000,0,0)= 1052.26

using PMT function in excel monthly payment of 30year mortgage

=PMT(5%/12,360,180000,0,0)= 966.28

he would prefere a 30 year mortgage because its installment amount is 966.28 which is less than 1000 which monthly can be afforded

2-total of PITI on 30 year mortgage

total payment of interest and principal = 966.28 *360 = 347860.8

taxes = 2500*30 = 75000

insurance = 1900*30= 57000

total piti amount = 347860.8+75000+57000 =479860.8

3-

4- value of house = 225000

new value = 225000*60% = 135000

new tax = 135000*1.9 = 256500/100 = 2565

installment interest principal balance 180000 966.28 749.88 216.4 179783.6 966.28 748.9785 217.3015224 179566.3 966.28 748.0732 218.2068005 179348.1 unpaid principal

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