Final answer:
The correct answer to how many days a borrower has to occupy a home with an FHA loan is B. 60 days. Borrowers benefit when mortgage interest rates are lower than inflation, while lenders benefit when rates exceed inflation. Joanna's maximum loan affordability and total cost over 30 years can be calculated using a standard loan formula. The correct option is B.
Step-by-step explanation:
A borrower with an FHA loan is typically required to occupy the home as their principal residence within 60 days of signing the security instrument.
Therefore, the correct answer would be B. 60 days. FHA loans are government-backed loans that are designed for low-to-moderate-income borrowers who are unable to make a large down payment.
As for the interest rates and inflation question from the mortgage loan scenario, borrowers benefit when the interest rates on their mortgage are lower than the rate of inflation, as this means the real cost of the loan decreases over time. Conversely, lenders benefit when the interest rate exceeds the rate of inflation.
In the scenario with Joanna, to determine the maximum loan she can afford with an annual payment of $12,000 at an interest rate of 4.2% over 30 years, one would use the loan formula for an installment loan or a financial calculator.
After 30 years, she will have paid the total cost of the loan, which will include the principal borrowed plus the accumulated interest. The correct option is B.