This is for a college math class..I'm trying everything I can here!! Can anyone help out with ANYTHING on this loan problem? I have a test tomorrow, and our professor didnt go over this problem with us:
The Smith's want to buy a $144,000 house. Their income is $50,000 a year. They have $30,000 in savings. The current rate of interest is 7.2% APR. They would like to take out a 20 yr. loan. Taxes on this house is $2400 a yr. and the house insurance is $300 per yr.
Questions:
1. Can they afford the home?
2. How much can the Smith's afford to pay/month on the house, taxes, and insurance?
3. Estimate the total pay for the house.
4. Can the Smith's make a down payment?
5. What is the house payment not including taxes and insurance?
6. How much will the Smith's pay for this house at the end of their mortgage?
7. How much interest will they pay at the end of theis mortgage?
8. What will their monthly expenses be on this house?
If anyone has any input, please help!
2007-10-16 16:31:44 · 3 answers · asked by -♥-lovely 4 in Business & Finance ➔ Taxes ➔ United States
I know business isn't for me..does it look like it is? That's why its not my major..and that's not the point of my question.
2007-10-16 16:49:03 · update #1
No.
The principle and interest would be $1133, plus $225 per month for taxes and insurance, for a total of $1358 a month. This would be close to 33% of their pre-tax income. Most lenders do not want to see total debt service exceed 40% of income (about $1700 per month), so these folk would have very little left for car payments and other loans. FHA is even more conservative.
A mortgage payment should be less than 20%, or $10,000 a year for the Smiths, or just over $800 a month.
Even if these people used their entire savings for closing costs and down payment, not a good idea, the monthly would still be too high.
None of the other questions are germane, as the Smith's would never successfully pay off the loan. They would default.
2007-10-16 17:29:43 · answer #1 · answered by zealot144 5 · 1⤊ 0⤋
If you key "mortgage calculator" into a search engine, you'll get several calculators that will let you enter the amount of a loan, interest rate, and length of loan, and get the payment amount and how much interest they'll pay by year and total.
Their monthly payment will be what you get from the mortgage calculator (which is principal and interest) plus 1/12 of the real estate taxes and 1/12 of the annual insurance.
2007-10-16 16:38:47 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
u should not be taking this class if you can't figure the answers.
Pay attention in class or get a tutor.
Business isn't for u.
2007-10-16 16:35:50 · answer #3 · answered by Anonymous · 0⤊ 1⤋