You are purchasing a home for $300,000 and have a 20% down payment. You are deciding between a conventional loan for 5% where you would need to pay 2 points, or an FHA loan for 6% where you only pay 1 point. a. How much will points in each example cost in dollars? b. What are some factors determining which loan you choose?

You are purchasing a home for $300,000 and have a 20% down payment. You are deciding between a conventional loan for 5% where you would need to pay 2 points, or an FHA loan for 6% where you only pay 1 point. a. How much will points in each example cost in dollars? b. What are some factors determining which loan you choose?

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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Someone needs to borrow $13,000 to buy a car and the person has determined that monthly payments of $250 are affordable. The bank offers a 4-year loan at 8% APR, a 5-year loan at 8.5%, or a 6-year loan at 9% APR. Which loan best meets the person's needs? Explain. Question content area bottom Part 1 Which loan best meets the person's needs? (Round to the nearest cent as needed.) A. The third loan best meets the person's needs because the monthly payment of $ enter your response here is less than the maximum budgeted amount of $ per month. B. The first loan best meets the person's needs because the monthly payment of $ enter your response
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Suppose you want to buy a car. You have surveyed the dealers' newspaper advertisements, and the one shown has caught your attention. You can afford to make a down payment of $2,678.95, so the net amount to be financed is $20,000.(a) What would the monthly payment be?(b) After the 25th payment, you want to pay off the remaining loan in a lumpsum amount. What is this lump sum?
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Someone needs to borrow $14,000 to buy a car and the person has determined that monthly payments of $300 are affordable. The bank offers a 3-year loan at 6% APR, a 4-year loan at 6.5%, or a 5-year loan at 7% APR. Which loan best meets the person's needs? Explain. ... Which loan best meets the person's needs? (Round to the nearest cent as needed.) O A. The second loan best meets the person's needs because the monthly payment of $ is less than the maximum budgeted amount of $300 per month. O B. The third loan best meets the person's needs because the monthly payment of $ is less than the maximum budgeted amount of $300 per month OC. The first loan best meets the person's needs because the monthly payment of S is less than the maximum budgeted amount of $300 per month. O D. None of the loans meet the person's needs.
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Please build an excel spreadsheet and show the formulas to answer a. through g. using the information below You bought a house with price of $250,000. Your LTV (loan-to-value ratio) is 80%. You choose the 30-year mortgage with interest rate 6%. Assuming the total transaction cost is $10,000. a. What is your loan amount? b. What is your monthly payment? c. What will be the loan balance at the end of nine years? d. What is the effective borrowing cost if the loan will be prepaid at the end of nine years? e. In the monthly payment, how much you pay for the principle and how much you pay for the interest in the 1st and the 2nd month? f. What will be your interest payments for the first 5 years (year 1 to year 5) and the last 5 years (year 26 to year 30)? g. What is your annual percentage rate (APR)?
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