Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The Browning family of Colorado wants to buy a $102,000 house.

(a) If they can get a loan of 80% of the value of the house, what is the amount of the loan?


(b) What will be the down payment on this loan?


(c) If they decide to obtain an FHA loan, what will be the minimum cash investment? (Do not forget that the maximum FHA loan for this location has to be determined using the FHA Maximum Loan Values by State table.)
Expert Solution
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The Federal Housing Administration insures private lenders who make FHA loans. The FHA does not really issue loans; rather, it merely protects lenders from loss in the event that a borrower defaults on their obligation to make timely payments.

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