Duke was approved for a 30 year conventional loan for $250,000 at 3.65% fixed rate. He was also approved for a 15 year conventional loan for $250,000 at 3.45% fixed rate. He has $20,000 to put as a down payment. He has to pay insurance of $1400 a year and property tax of $2500 a year. Use time value of money to figure out the best options for Duke. To avoid PMI (at least 20% down) what amount would Duke have to put down if he wants to take out the full amount of the loan ($250,000)?
Duke was approved for a 30 year conventional loan for $250,000 at 3.65% fixed rate. He was also approved for a 15 year conventional loan for $250,000 at 3.45% fixed rate. He has $20,000 to put as a down payment. He has to pay insurance of $1400 a year and property tax of $2500 a year. Use time value of money to figure out the best options for Duke. To avoid PMI (at least 20% down) what amount would Duke have to put down if he wants to take out the full amount of the loan ($250,000)?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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- Duke was approved for a 30 year conventional loan for $250,000 at 3.65% fixed rate. He was also approved for a 15 year conventional loan for $250,000 at 3.45% fixed rate. He has $20,000 to put as a down payment. He has to pay insurance of $1400 a year and property tax of $2500 a year. Use
time value of money to figure out the best options for Duke.
- To avoid PMI (at least 20% down) what amount would Duke have to put down if he wants to take out the full amount of the loan ($250,000)?
Expert Solution
Step 1
Total cash outflow refers to an amount that is paid in total in a complete loan period including interest and principal by the borrower to the lender for the repayment of the loan amount.
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