section 5 part 6

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?

$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.

A buyer places a loan on a property for $100,000 at 9.5% interest for 30 years, fully amortized. If the monthly payment is $840.87, what is the balance of the loan after 3 payments have been made?

$100,000 x .095 / 12 = $791.66 paid to interest 1st payment. $840.87 - $791.66 = $49.21 paid to principal 1st payment. $100,000 - $49.21 = $99,950.79 loan balance after 1st payment. $99,950.79 x .095 / 12 = $791.27 paid to interest 2nd payment. $840.87 - $791.27 = $49.60 paid to principal 2nd payment. $99,950.79 - $49.60 = $99.901.19 loan balance after 2nd payment. $99,901.19 x .095 / 12 = $790.88 paid to interest 3rd payment. $840.87 - $790.88 = $49.99 paid to principal 3rd payment. $99,901.19 - $49.99 = $99,851.20 loan balance after 3rd payment. The correct answer is: $99,851.20

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.

On a loan balance of $121,500 the monthly interest charge is $607.50. What is the interest rate?

$607.50 X12 months = $7,290 annualized interest. $7,290 divided by $121,500 = .06 = 6% interest. The correct answer is: 6.0%.

What is the current balance of a 7.5% loan if this month's interest charge is $786.97?

$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 property sold for $40,625 with an 80% loan at 9% interest. If the monthly payment is $325, what is the remaining balance on the loan at the end of two months?

$40,625 X .80 = $32,500 loan. $32,500 X .09 / 12 = $243.75 interest, 1st payment. $325 - $243.75 = $81.25 principal, 1st payment. $32,500 - $81.25 = $32,418.75 loan balance after 1st payment. $32,418.75 X .09 / 12 = $243.14 interest, 2nd payment. $325 - $243.14 = $81.86 principal, 2nd payment. $32,418.75 - $81.86 = $32,336.89 balance, after 2nd payment. The correct answer is: $32,337

A property sells for $150,000. The buyer will make a 20% down payment and pay the lender three points. How much will the buyer pay for points?

Selling price = $150,000 - $30,000 down payment = $120,000 loan. Loan amount $120,000 x 3% = $3,600 for points. Remember, a point is 1% of the loan amount. The correct answer is: $3,600

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?

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