The Allens are considering buying a house and need to figure out what they can afford and what a bank will lend them. Bill’s annual income is $165,000. Their monthly mortgage payment for the house they want would be $1,650. Their annual property taxes would be $9,000. The home-owner’s insurance premium would cost them $1,100 per year. They have a $550 per month car loan. Their average monthly credit card bill is $4,800. Will the bank lend them the money to purchase the house using the back end ratio with an acceptable range of 36% or less?

Johnny and Lucy have purchased a home for $365,000. They will need to obtain a mortgage for 85% of that amount. The Near State Bank will give them a mortgage for 30 years at 9.5% interest. Their monthly payment will be $2500.50. Over the first 4 months, how much will go towards interest and how much will go towards principal?

Booker graduated from Baruch 10 years ago and now wants to buy his first condo. He has saved enough for a $100,000 down payment and now wants to get a $400,000 mortgage to cover the cost of his new $500,000 home.  His bank is offering him either a 3% 15-year mortgage or a 4% 30-year mortgage. What would be the total amount he would have to pay for the 3% 15-year mortgage (interest and principal)? and  What would be the total amount he would have to pay for the 4% 30-year mortgage (interest and principal)?

6) Susan is looking to purchase her first home five years from today. The house costs $1,550,000. She will have to make a down payment of 10% of this amount and plans to take a loan from the bank for the difference. Bank charges are approximately 15% of the loan amount. She plans to start saving from today to cover both the down payment and the bank charges. a. How much will she need to save to cover both the down payment and bank charges? b. If she currently has $195,000 in her account and will make no further deposits over the next five years, what rate of interest must she earn on this account in order to achieve the savings target calculated in part (a) above?

Deb and Rusty have just gotten married and wish to buy a home. They both work in Boston and have a combined income of $90,000. They found a modest starter house which they are buying for $350,000. 1. They plan to use their $40,000 is savings to cover the closing costs the bank will charge them, which are 1% of the amount they borrow from the bank. The rest of the savings will be used as a down payment. Determine the largest amount they can use for a down payment and still pay the closing costs. 2. Using the amount Deb and Rusty have to borrow from part 1, open Excel and create a 20-year amortization schedule, giving monthly payments for the amount they borrowed at a 4.5% annual interest rate. You must use the pmt function in Excel to compute the monthly payment. Title this worksheet Amortization. For your answer to this question write “See Excel Workbook”. 3. Use the amortization schedule to compute the total amount of interest they will pay to the bank over the 20 years. 4. Create a…

Booker graduated from Baruch 10 years ago and now wants to buy his first condo. He has saved enough for a $100,000 down payment and now wants to get a $400,000 mortgage to cover the cost of his new $500,000 home.  His bank is offering him either a 3% 15-year mortgage or a 4% 30-year mortgage. How much would he have to pay each month for the 3% 15-year mortgage? and How much would he have to pay each month for the 4% 30-year mortgage?

Arthur is planning on buying a house and needs to take out mortgage for $200,000 . He has two choices a 30 year with monthly payments of $1,468 and a 15 years with monthly payments of 1,854 . Arthur want to pay the Lowest interest rate possible What is interest rate on each mortgage and which mortgage should he pick? He changes his mind and want to pay the smallest amount of total interest. What are the total interest charges for each mortgage and which mortgage should he pick now ?

Sam and Deb have a weekly net income of $1700. Their monthly expenses, not related to housing, are $2875. They have savings of $32 000. They are considering two housing options: Option 1: Renting a 2-bedroom condo for $1650 a month, plus utilities averaging $210 a month Option 2: Buying a 2-bedroom condo for a down payment of $24 500, bi-weekly mortgage payments of $1100, and a monthly condo fee of $475 a) Determine the monthly cost of each housing option. Which one can Sam and Deb afford? Which would you recommend?  b) Suppose Sam’s mother falls ill and he has to pay $575 every two weeks to cover her expense. Calculate the additional monthly expenses. Based on your answer in a), would your recommendation change? Explain

Joe has $1,500 in credit card debt but pays it in full every month from cash flow. He also pays her mortgage from cash flow ($2,000 principal). For savings, Joe saves $50 per month in an interest-bearing savings account. Annual interest earned and reinvested is $100. How much will his net worth increase in the current year?

Lori earns $3,898 per month. She has a monthly rent payment of $980 along with average credit card payments of $325 and student loan payments of $250. She wants to finance a car but needs to determine her maximum car payment to keep her back end DTI at 39%. What would this payment be?