barney fletcher math loans

Ricky and Lucy are buying a house for $180,000 and putting up a $20,000 down payment. They will borrow the rest of the money at 5% interest. If the amortization factor is 5.37 per $1,000 borrowed, what will be the monthly principal and interest payment?

$180,000 less 20,000 down payment = $160,000 loan. 160,000 divided by 1,000 X 5.37 = $859.20. The correct answer is: $859.20.

What is the current balance of a 7.5% loan if this month's interest charge is $786.97?t

$786.97 X 12 = $9,443.64 annualized interest. $9,443.64 divided by .075 = $125,915 (rounded). The correct answer is: $125,915.

A borrower takes out $175,000 30-year, fixed-rate loan at 4.5% interest. The monthly payment is $886.70. What would be the total interest paid if the loan is held until maturity? Select one: a. $319,212. b. $288,155. c. $161,322. d. $144,212.

$886.70 X 12 months X 30 years = $319,212 total payments. $319,212 less $175,000 initial loan amount = $144,212 interest paid over the life of the loan. The correct answer is: $144,212.

What is the annual interest rate on a loan of $25,500 if the interest payments are $956.25 semiannually on the full loan amount?

$956.25 X 2 = $1,912.50 annual interest. $1,912.50 divided by $25,500 = .075 = 7.5%. The correct answer is: 7.5%.

A lender's policy states that monthly payments for principal and interest cannot exceed 30% of the borrower's gross monthly income. If the borrower can qualify for a loan payment of $1,500, what is the minimum monthly income required to support this payment?

$1,500 divided by .30 = $5,000. The correct answer is: $5,000.

G obtains an 8% loan for $2,400. The loan is to be repaid in four payments of $600 each, plus interest at six-month intervals. How much interest will G pay during the term of the loan?

Remember the outstanding loan balance changes with each $600 payment. $2,400 X 8% / 2 = $96. Interest 1st six months. $1,800 X 8% / 2 = $72 Interest 2nd six months. $1,200 X 8% / 2 = $48. Interest 3rd six months. $ 600 X 8% / 2 = $24 Interest 4th six months. Total Interest = $240. The correct answer is: $240

Use the amortization table to solve this problem. We recommend writing this one out manually to get a better visual. A new row begins after each vertical bar (|), and a comma separates each cell. Per $1,000 of loan amount: |Rate, 15 Years, 20 Years, 25 Years, 30 Years |9%, 10.15, 9.00, 8.40, 8.05 |9.5%, 10.45, 9.33, 8.74, 8.41 |10%, 10.75, 9.66, 9.09, 8.78|. Assume you borrow $110,000 at 9% for 25 years. How much interest will be paid if the loan is paid off at the scheduled maturity date?

The amortization table indicates a monthly payment of $8.40 per $1,000. $110,000 x $8.40 = $924 per month. $924 x 300 (25 years at 12 payments per year) = $277,200. $277,200 is the total you would pay, but $110,000 of it is for principal. $277,200 - $110,000 = $167,200 total interest paid. The correct answer is: $167,200

Charlie borrowed $6,000 from Sam. The terms of the loan stated that Charlie was to make quarterly payments of $1,500 plus 9% interest per annum on the outstanding balance. What was the total amount of the payments (including principal) to repay the loan?

The outstanding loan balance will drop by the $1,500 quarterly principal payment. Quarter 1: $6,000 X .09 divided by 4 = $135.00 interest; Quarter 2: $4,500 X .09 divided by 4 = $101.25 interest; Quarter 3: $3,000 X .09 divided by 4 = $67.50 interest. Quarter 4: $1,500 X .09 divided by 4 = $33.75 interest. $135.00 + $101.25 + $67.50 + $33.75 = $337.50 total interest. $6,000 principal paid + $337.50 interest = $6,337.50 total payments. The correct answer is: $6,337.50.

Use the amortization table to solve this problem. We recommend writing this one out manually to get a better visual. A new row begins after each vertical bar (|), and a comma separates each cell. Per $1,000 of loan amount: |Rate, 15 Years, 20 Years, 25 Years, 30 Years |9%, 10.15, 9.00, 8.40, 8.05 |9.5%, 10.45, 9.33, 8.74, 8.41 |10%, 10.75, 9.66, 9.09, 8.78|. A couple can qualify for a monthly loan payment of $1,200 (P&I). In addition to closing costs, they will make a $10,000 down payment. If lenders are offering 20-year loans at 9.5%, what is the maximum amount that they can spend on a house? (To the nearest $100)

Using the table, 20-year loans at 9.5% require $9.33 per $1,000. $1,200 (monthly) / $9.33 x $1,000 = $128,617 loan amount. $128,617 loan + $10,000 down = $138,617 purchase price, which would be rounded down to $138,600. The correct answer is: $138,600

Ward and June need to borrow $150,000 to purchase a house. They are debating between a 15-year loan at 3.75% and a 30-year loan at 5%. The 30-year loan has a monthly payment of $805.23 (P&I) while the 15-year loan has monthly payment of $1,090.83 (P&I). Which of the following statements is correct regarding the total interest paid if the loans were to be held for their full term?

5-year loan: $1090.83 X 15 years X 12 payments per year = $196,349 total payments. $196,349 less $150,000 = $46,349 total interest paid. 30 year loan: $805.23 X 30 years X 12 payments per year = $289,883 total payments. $289.883 less $150,000 = $139,883 total interest paid. The 30-year loan costs more in interest because payments are made for more years. $139,883 less $46,533 = $93,533. The total interest paid on the 30-year loan exceeds the total interest paid on the 15-year loan by $93,533. The correct answer is: The total interest paid on the 30-year loan exceeds the total interest paid on the 15-year loan by $93,533.

A couple is qualified for a monthly mortgage payment of $1,136. They are putting up a down payment of $25,000 plus closing costs. If the amortization factor for the loan is 5.68 per $1,000 of loan amount, how much can they afford to pay for the house? Select one: a. $200,000. b. $225,000. c. $250,000. d. $275,000.

Divide the $1,136 monthly payment by the amortization factor of 5.68 for a result of 200. $200 X 1,000 = $200,000. Now add the $25,000 down payment for the answer of $225,000. The correct answer is: $225,000.

A homebuyer took out a $350,000 30-year fixed rate loan at 4.5% interest with a monthly payment of $1,773.40. After making two monthly payments the principal balance of the loan will have been reduced by a total of:

First month's payment: $350,000 X .045 = $15,750 annualized interest. $15,750 divided by 12 = $1,312.50 first month's interest. $1,773.40 less $1,312.50 interest = $460.90 first month's principal reduction. $350,000 less $460.90 = $349,539.10 remaining balance. Second month's payment: $349,539.10 X .045 = $15,729.30 annualized interest. $15,729.30 divided by 12 = $1,310.77 second month's interest. $1,773.40 less $1,310.77 = $462.63 second months principal reduction. $460.90 + $462.63 = $923.63 total principal reduction after 2 payments. The correct answer is: $923.53.

Use the amortization table to solve this problem. We recommend writing this one out manually to get a better visual. A new row begins after each vertical bar (|), and a comma separates each cell. Per $1,000 of loan amount: |Rate, 15 Years, 20 Years, 25 Years, 30 Years |9%, 10.15, 9.00, 8.40, 8.05 |9.5%, 10.45, 9.33, 8.74, 8.41 |10%, 10.75, 9.66, 9.09, 8.78|. A buyer wants to borrow $120,000 at 9.5% interest. The buyer can afford to pay $1,200 per month. What is the shortest possible term of loan the buyer can obtain? Select one: a. 15 years b. 20 years c. 25 years d. 30 years

Follow the chart along the row for 9.5%. Then multiply the rate shown under each amount column by the loan amount ($120,000). $120,000 X 10.45 / $1,000 = $1,254 per month. The buyer cannot afford this. $120,000 X 9.33 / $1,000 = $1,119 per month. The buyer can afford this. Therefore, the shortest term loan, within their budget, is 20 years. The correct answer is: 20 years

If a homebuyer took out a 30-year $150,000 fixed rate loan and the monthly principal and interest payment was $760.03. If the first monthly payment reduces the principal balance by $197.80, what is the interest rate of the loan? Select

If the first payment reduced the principal balance by $197.80, the first month's interest payment must have been $562.50, which is the $760.03 less the $197.80 principal payment. First multiply the monthly interest payment times 12 to get the annualized payment: $562.50 X 12 = $6,750. Now divide the annualized interest by the loan amount to determine the interest rate. $6,750 divided by $150,000 = .045 = 4.5%. The correct answer is: 4.5%.

Bob and Carol are buying a home for $180,000 and putting up a down payment of 20%. They have to pay 2 discount points. What will be the amount paid for the discount points? Select one: a. $3,600. b. $3,250. c. $3,000. d. $2,880.

$180,000 price X 20% = $36,000 down payment. $180,000 less $36,000 down payment = $144,000 loan amount. $144,000 X .02 = $2,880 in discount points. The correct answer is: $2,880.