640 CHAPTER 10 Consumer Mathematics interest rate is adjusted once a year and a new monthly mortgage payment is calculated. a) Determine the Bhatts’ initial ARM rate. 4.0% b) Determine the Bhatts’ initial monthly payment for principal and interest. $1139.24 c) If, after the 5-year initial rate period, the rate of the one-year Treasury bill rises to 3.0%, determine the Bhatts’ new ARM rate. 5.5% 28. An Adjustable Rate Mortgage The Pourans purchased a new home for $378,000 with a down payment of $127,000. They obtained a 10-year adjustable rate mortgage with the following terms. The interest rate is based on the one-year Treasury bill rate, which is currently at 2.5%, and the add-on rate, which is 3.5%. The initial rate period is 5 years, and thereafter the interest rate is adjusted once a year and a new monthly mortgage payment is calculated. a) Determine the Pourans’ initial ARM rate. 6.0% b) Determine the Pourans’ initial monthly payment for principal and interest. $2786.61 c) If, after the 5-year initial rate period, the rate of the one-year Treasury bill falls to 1.5%, determine the Pourans’ new ARM rate. 5.0% 29. Comparing Loans The Riveras are negotiating with two banks for a mortgage to buy a house selling for $105,000. The terms at bank A are a 10% down payment, an interest rate of 4%, a 30-year conventional mortgage, and 3 points to be paid at the time of closing. The terms at bank B are a 20% down payment, an interest rate of 5.5%, a 25-year conventional mortgage, and no points. Which loan should the Riveras select for the total cost of the house to be the least? Bank B 30. Comparing Loans Paul is negotiating with two credit unions for a mortgage to buy a condominium selling for $525,000. The terms at Grant County Teacher’s Credit Union are a 20% down payment, an interest rate of 7.5%, a 15-year mortgage, and 1 point to be paid at the time of closing. The terms at Sinnipee Consumer’s Credit Union are a 15% down payment, an interest rate of 8.5%, a 20-year mortgage, and no points. Which loan should Paul select for the total cost of the down payment, points, and total mortgage payments of the house to be the least? The loan from Grant County Teacher’s Credit Union 31. Evaluating a Loan Request The Nejems found a house selling for $550,000. The taxes on the house are $5634 per year and the insurance is $2325 per year. The Nejems are requesting a conventional loan from a local bank. The bank requires a 20% down payment and 3 points at the closing. The Nejems are trying to qualify for a 30-year mortgage with an interest rate of 5.5%. Their gross monthly income is $15,375. They have more than 10 monthly payments remaining on a car loan, student loans, and a furniture loan. The total of these monthly payments is $995. Their bank will approve a loan that has a total monthly house payment of principal, interest, property taxes, and homeowners’ insurance that is less than or equal to 28% of their adjusted monthly income. a) Determine the required down payment. $110,000 b) Determine the cost of the 3 points. $13,200 c) Determine 28% of the Nejems’ adjusted monthly income. $4026.40 d) Determine the monthly payment for principal and interest. $2498.27 e) Determine their total monthly house payment, including insurance and taxes. $3161.52 f) Do the Nejems qualify for the loan? Yes g) Determine how much of the first mortgage payment is applied to the principal. $481.60 h) Determine the total amount they pay for the house (Do not include taxes or homeowners’ insurance.) $1,022.577.20 i) Determine the total interest paid (including the points). $472,577.20 32. Evaluating a Loan Request Kathy wants to buy a condominium selling for $95,000. The taxes on the property are $1500 per year, and homeowners’ insurance is $336 per year. Kathy’s gross monthly income is $4000. She has 15 monthly payments of $135 remaining on her van. The bank is requiring 20% down and is charging a 9.5% interest rate with no points. Her bank will approve a loan that has a total monthly mortgage payment of principal, interest, property taxes, and homeowners’ insurance that is less than or equal to 28% of her adjusted monthly income. a) Determine the required down payment. $19,000 b) Determine 28% of her adjusted monthly income. $1082.20 c) Determine the monthly payment of principal and interest for a 25-year loan. $664.01 d) Determine her total monthly payment, including homeowners’ insurance and taxes. $817.01 e) Does Kathy qualify for the loan? Yes Anatoli Igolkin/Shutterstock
RkJQdWJsaXNoZXIy NjM5ODQ=