JU MeI uiz Me: 8.5-5 Calculate amounts paid when buying a hous c Submit Quiz Thi
ID: 2788911 • Letter: J
Question
JU MeI uiz Me: 8.5-5 Calculate amounts paid when buying a hous c Submit Quiz This Question: 1 pt 1 of 4 This Quiz: 4 pts possible dt Use the information in the table to calculate (a) the deposit due at signing. (b) the amount you pay in points, and (c) the total amount that you Cost of Home $210,000 Deposit Points 4% Costs $2,400 25% a. The deposit due at signing is SD (Type an integer or a decimal.) b. The amount to pay in points is S. (Type an integer or a decimal ) c. The total amount due at closing is s(Type an integer or a decimal.)Explanation / Answer
Q1
a. Deposit due at signing = 25%* 210000 = $52,500
b. Amount to pay in points = 4%*52,500 = $2100
c. Total closing costs = 2100+2400 = $4500
Q2
The monthly payment will reduce by $ 298
The interest will reduce by $78,428
In case 1, when the down payment is $53000, the amount of loan is given to be $ 240000. This is the PV of loan
The interest rate = 12% pa = 1% per month
Period = 30 years = 360 months
Monthly payment computed by the formula = PMT(1%,360,-240000) = $2468.67 or using the table provided on $1000 loan, the monthly payment will be $10.29*240 = $2469.60
Total interest = 2469.6*360 - 240000 = $649,056
If down payment increases by 29000, the amount of loan will be 240000-29000 = $211,000
Accordingly the monthly payment will be =PMT(1%,360,-211000) = $ 2170.37 or using the given table, PMT= 10.29*211 = $2171.19
Hence reduction in monthly payment = $2469.6- 2171.19 = $ 298.41
Total interest = 2171.19*360 - 211000= $570628.40
Reduction in interest = 78,427.60
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