Question

12. You want to buy a $175,000 home, and you have $60,000 saved up. The bank offers a 15-year mortgage at 3.2% interest.(a) If you expect to pay $5,775 in closing costs, what percentage down payment can you afford? Round your answer to the nearest tenth of a percent. %(b) If you put less than 20% down, you'll need to pay mortgage insurance. Will you require mortgage insurance?YesNo(c) What will the principal be on the loan?$ (d) What will your monthly P&I (principal and interest) payment be?$ (e) In addition to principal and interest, the property taxes will be 1.5% of the home value per year, the homeowners insurance will be $850 per year, and the mortgage insurance (if needed, according to part (b)) will be $40 per month. What will your total monthly payment amount be?$ (f) How much will you pay in total over 15 years in principal and interest?$ (g) How much interest will you pay in total?$

Answer 1

Step 1:

In this question,we have the following:

Step 2:

Part A: You want to buy a $ 175,000 and you have a $ 60,000 saved up.

The bank offers a 15-year mortgage at 3.2 % interest.

a) If you expect to pay $ 5,775 in closing costs. What percentage down payment can you afford? Round your answer to the nearest tenth of a percent.

If you saved up $60, 000 and the closing costs is $ 5,775

The difference will be:

`60,000dollars\text{ - 5,775 dollars =54, 225 dollars}`
`\begin{gathered} \text{Percentage of down payment = }(54225)/(175,000)X\text{ 100} \\ =\text{ }(5,422,500)/(175,000) \\ =\text{ 30.98571429} \\ \approx\text{ 31 \% ( to the nearest tenth)} \end{gathered}`

Part B :

If you put less than 20% down, you'll need to pay mortgage insurance.

Will you require mortgage insurance? YES or NO

The answer is NO because 31% is far more than 20%

Part C:

What will be the principal be on the loan?

The principal on the loan =

`175,000\text{ dollars - 54,225 dollars = 120, 775 dollars}`

Part D:

What will be your monthly P & I (principal and interest) payment be?

`It\text{ will be 845 dollars}`

Part E:

In addition to principal and interest, the property taxes will be 1.5 % of the home value per year, the house owners insurance will be $850 per year and the mortgage insurance. What will your total monthly amount be?

`((1.5)/(100)(175000)+850)/(12)\text{ + 845}`
`\begin{gathered} =\text{ 289. 6+845} \\ =1134.6\text{ dollars} \end{gathered}`

Part F:

How much will you pay in total over 15 years in principal and interest?

`\begin{gathered} \text{Monthly payment x Number of months} \\ =\text{ 845 x 15 x 12 } \\ =\text{ 152,100 dollars} \end{gathered}`

Part G:

How much interest will you pay in total?

`\begin{gathered} \text{Amount - Principal} \\ =\text{ 152,100 - 120,775} \\ =\text{ 31,325 dollars} \end{gathered}`