448 Chapter 10 Consumer Mathematics
- Ricky and Lucy bought an apartment for $110,000. They made a 25% down payment and fi nanced the rest with a
15-year loan at 7.8% interest. Taxes are $1,900 per year, insurance is $400 and PMI (if required) would cost $60 per
month. What is their total monthly payment? - Jerry bought a house for $182,000 with a $32,000 down payment. Is it likely that Jerry would need to pay PMI?
- Suppose Wendy and Peter decided to buy a $297,000 house with an 8% down payment. Property taxes are $7,200 and
homeowners’ insurance is $1,550 per year. Closing costs are $3,300. Assuming their mortgage requires no points, how
much money do they need up front to buy the house? If instead they took out a mortgage loan requiring 2 points, how
much would they need up front then? - Jamie and Cameron own a house with a market value of $258,000. They presently owe $148,923.54 on their
mortgage loan. They are considering taking out a home equity loan. A lender offers to make a home equity loan with
up to a 105% LTV. What is the maximum they could borrow from this lender? What would their equity in the house be if
they took out the maximum loan? - Glenys is buying a $130,000 house with a 10% down payment.
a. If she fi nances the purchase with a 30-year loan at 8.5% and no points, how much will her monthly mortgage
payment be?
b. If she fi nances the purchase with a 30-year loan at 7.5% and 2 points, how much money will she need up front for
the points and how much will her monthly mortgage payment be?
c. What is Glenys’ payback period for the points?- Travis and Lisa have a joint gross annual income of $47,035. If they apply for a mortgage with a lender that uses only
the 28% income test, what would be the maximum monthly PITI for which they would qualify? - Tom is buying a $145,000 house with a 20% down payment. Closing costs are $4,200, property taxes are $3,800
annually, and homeowners’ insurance is $520.
a. If he fi nances the purchase with a 30-year loan at 8.2% and 0.5 point, how much money will he need up front and
how much will his monthly PITI payment be?
b. If he fi nances the purchase with a 30-year loan at 7.0% and 2.5 points, how much money will he need up front
and how much will his monthly PITI payment be? - Ramesh and Mackenzie plan to buy a townhouse for $150,000. They would make a $25,000 down payment and
fi nance the rest with a 30-year loan at 8.4% interest. Property taxes are $2,800 per year, homeowners’ insurance is
$620, and PMI would be $60 per month.
a. What will their total monthly PITI payment be for the house?
b. If they have a combined annual income of $61,500, do they pass the 28% test? - Janet’s property taxes are $2,034.76 annually, and her homeowners’ insurance premium is $585.02 annually. What is
her monthly escrow payment?