27.03.2023 - 17:47

Heather and her husband would like to purchase a home in the Scottsdale area. She found this one online (Pleasant Dr., Scottsdale for $309,900) and after talking to a Loan Officer at BB&T, she has learned some information about current mortgage rates. The

Question:

Heather and her husband would like to purchase a home in the Scottsdale area. She found this one online (Pleasant Dr., Scottsdale for $309,900) and after talking to a Loan Officer at BB&T, she has learned some information about current mortgage rates. The Loan Officer further indicated that she would need to pay a 25% down payment and 1 point at closing. Heather wants to finance the home for 30 years with a fixed interest mortgage. Using this information, calculate the following for the purchase of this house for Heather and her husband:

1. Down payment

2. Mortgage amount

3. Points amount

4. Monthly payment

5. Total paid for the house

6. Interest paid

Convential Loan Rates

30 Year Fixed 3.75%

15 Year Fixed 3%

30 Year Refinance 3.75%

15 Year Refinance 3%

Answers (1)
  • ElOnza
    April 10, 2023 в 13:13

    To calculate the requested values for Heather and her husband's potential purchase, we need to use the following given information:

    • The home price is $309,900
    • The down payment required is 25%
    • There is a 1 point charge at closing
    • The loan term is 30 years
    • The interest rate is a fixed rate for a conventional loan and is 3.75%.
    1. Down payment: The down payment is calculated as a percentage of the home price. In this case, Heather and her husband will need to put down 25% of $309,900, which is $77,475.

    2. Mortgage amount: The mortgage amount is calculated as the difference between the home price and the down payment. In this case, the mortgage amount will be $232,425 ($309,900 - $77,475).

    3. Points amount: The points amount is calculated as a percentage of the loan amount. In this case, the loan amount is $232,425, and there is a 1 point charge at closing, so the points amount will be $2,324.25 ($232,425 x 0.01).

    4. Monthly payment: To calculate the monthly payment, we can use the formula for a fixed-rate mortgage payment: Monthly payment = P * (r / n) * [(1 + (r / n))^nt / ((1 + (r / n))^nt - 1)] where P is the loan amount, r is the interest rate, n is the number of payments per year, and nt is the total number of payments. For a 30-year mortgage with a fixed interest rate of 3.75%, the number of payments per year is 12, and the total number of payments is 30 x 12 = 360. Plugging in the values, we get: Monthly payment = $1,076.63

    5. Total paid for the house: The total amount paid for the house is the sum of the down payment, the mortgage amount, and the points amount. In this case, it will be $309,900 (home price) + $2,324.25 (points) + $77,475 (down payment) = $389,699.25.

    6. Interest paid: To calculate the interest paid over the life of the loan, we can subtract the loan amount from the total amount paid for the house and then subtract any additional principal payments made over the life of the loan. In this case, assuming no additional principal payments are made, the interest paid over the life of the loan will be $156,274.53.

    Note that these calculations are based on the given information, and actual rates and fees may vary based on a borrower's specific circumstances and creditworthiness.

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