. Your parents bought a home 15 years ago and have a mortgage rate of 9% on their $150,000 mortgage with a 30-year term. Today they could refinance into a new 15- year mortgage at a rate of 7%. Refinancing will cost $3500. a. Should they refinance if they plan to stay in the home for an additional 15 years? b. Should they refinance if they may only stay in the home for 5 more years?

. Your parents bought a home 15 years ago and have a mortgage rate of 9% on their $150,000 mortgage with a 30-year term. Today they could refinance into a new 15- year mortgage at a rate of 7%. Refinancing will cost $3500. a. Should they refinance if they plan to stay in the home for an additional 15 years? b. Should they refinance if they may only stay in the home for 5 more years?

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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Similar questions

A couple who wants to purchase a home with a price of $340,000 has $100,000 for a down payment. If they can get a 25-year mortgage at 6% per year on the unpaid balance, find each of the following. (a) What will be their monthly payments? (b) What is the total amount they will pay before they own the house outright? (c) How much interest will they pay over the life of the loan? (a) Their monthly payments would be approximately $ (Do not round until the final answer. Then round to the nearest hundredth as needed.) (b) They will pay a total amount of approximately $ before they own the house outright. (Use the answer from part a to find this answer. Round to the nearest hundredth as needed.) (c) The total interest is approximately $ (Use the answer from part b to find this answer. Round to the nearest hundredth as needed.)
A couple who wants to purchase a home with a price of $290,000 has $50,000 for a down payment. If they can get a 20-year mortgage at 7% per year on the unpaid balance, find each of the following. (a) What will be their monthly payments? (b) What is the total amount they will pay before they own the house outright? (c) How much interest will they pay over the life of the loan? (a) Their monthly payments would be approximately $. (Do not round until the final answer. Then round to the nearest hundredth as needed.)
Your parents buy a new house to downsize. They pay $250,000 and are planning on paying it off in a 15 year loan with equal annual payments of $19,167. What interest rate do you evaluate them to be paying on the loan?
You have been shopping for a new home. You have the choice of financing for your $300,000. You can choose either a 4.5% 30 year loan or a 5% 15 year loan. A) Assuming you take out the mortgage at age 30 - prepare the amortization schedule for each situation. B) Highlight the payment period when the interest flips on the 15 year note? On the 30? C) At age 45 when you pay off the 15 year mortgage, you decide to invest your previous monthly mortgage payment in a mutual fund earning 6% annually. What is the value of this investment at age 62 (17 years later)?
1.) Carl and Melissa have a monthly income of $6,000. They want to buy a house for $200,000 and make a down payment of $40,000. The monthly payment on a 15-year mortgage will be $2,000. On a 30-year mortgage, the monthly payment will be 1,350. which of the following would you recommend? A.) 15 year option B.) 30 year option C.) They cannot afford to buy a house at this point.
Problem: Jino sold his house. In addition to cash, he took a mortgage on the house. The mortgage will be paid off by monthly payments of P12, 345 for 10 years. He decided to sell the mortgage to a local bank. The bank will buy the mortgage, but requires a 1% per month interest rate on their investment. How much will the bank pay for the mortgage?
4. A couple wants to purchase a home in Texas. An average home in Texas in 2020 costs $213,036. The couple will put down a 20% down payment on the home and will finance the rest of their loan. If the average rate for a 30-year fixed mortgage is 3.85%, what is the monthly payment for the couple? Suppose in 20 years, the couple would like to refinance their home. If the interest rate were 2.83%, what would be their monthly payment?
You are looking to buy a $415,000.00 home in Haverhill. If Bank of America will give them a 15-year mortgage at 3.25% annual interest rate for the cost of the house after they receive a 20% down payment. At the end of the 15-years, how much total money will you have paid to Bank of America for your home? In another word how much did the $415,000.00 house really cost the couple?
Part B) Suppose karen has $2000 each month that she can allocate between mortgage payments and retirement. That is, if she pays $1200 toward her mortgage, then she can put the remaining $800 into her retirement account each month. She plans to retire in 30 years. If she goes with the 15 year home loan, then the first 15 years she will have to split the $2000 between mortgage and retirement, but then the last 15 years she can put all $2000 into her retirement account. If she goes with the 20 year home loan, then the first 20 years she will have to split the $2000 between mortgage and retirement, but then the last 10 years she can put all $2000 into her retirement account. If she goes with the 30 year home loan, then she will split the $2000 between mortgage and retirement for all 30 years. Her best retirement option offers her a nominal rate of 5.5%, compounded monthly. Calculate the value of her retirement account in 30 years under each of the 3 plans. Which plan will give her the…
You have just taken out a mortgage of $50,000 for 30 years, with monthly payments at 6% interest. The same day you close on the mortgage you receive a $25,000 gift from your parents to be applied to the mortgage principal. What amount of time will now be required to pay off the mortgage if you continue to make the original monthly payments? What is the amount of the last payment? (Assume any residual partial payment amount is added to the last payment.)
You are considering refinancing your home’s 30 year mortgage at a lower interest rate. Your original loan amount was $85,000 and your current monthly payment is $683.93. Assuming you wish to continue paying the same monthly amount on a new 30 year mortgage, how much cash can you pull out from refinancing the current loan balance at 6% now that you have been in the home for five years?
Mike and Jenny purchase a house for a selling price of 310,000 and need to make a 15% down payment. The remainder of the mortgage amount will be aromatized over 25 years at a rate of 3.5%/annually.Assume they will never refinance and will pay it off in the full 25 years. a)How much money will they need to borrow from the bank? b)What are their monthly payments? c)How much do they pay in total for their mortgage? d)If they could only afford to make payments of 1,200,how much would they have left to pay off their mortgage after 25 years? Please answer all subparts. I will really upvote. Thanks

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