HACE 3200 1nd Edition Lecture 17 Outline of Last Lecture I Housing II One Time or Initial Costs III Adjustable Rate Mortgage Outline of Current Lecture I Housing cont d II Practice Problems Current Lecture Other Mortgage Loan Options o Balloon payment mortgage small payments for several years after which entire loan must be paid off in one large balloon payment o Graduated payment mortgage payments steadily increase for a period of time and then level off Selecting a Home o The search process Use a traditional real estate agent OR use an independent or exclusive buyer broker Negotiating a Sales Price o Always haggle on the actual purchase price and counteroffers o Include all contingencies o Consider closing costs o Offer earnest money Signing the Sales Contract o Always have a fixed price o Do a title search o Make the contract contingent on receiving the proper financing These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Signing the Contract cont d o Divide the utilities insurance taxes and interest equitably with the seller o Stipulate the condition of the dwelling upon the transfer o Include all other contingencies that may interfere with a satisfactory purchase Calculating Mortgage Payment o Mortgage PVA o APR I Y converted to monthly if necessary o of payments periods N converted to months if necessary o CPT PMT computing mortgage payment EXAM 2 LOAN AND MORTGAGE PRACTICE PROBLEMS 1 Haley is buying a new car Her bank is offering her an annual interest rate of 7 9 on a new auto loan She will take out a loan for 84 months The car she is buying costs 47 000 What will Haley s monthly payment be on her new car PVA 47 000 I Y 7 9 12 6583 N 84 CPT PMT 730 21 2 Josh is buying his own home His mortgage company has offered him a mortgage loan at an annual percentage rate of 8 5 Josh is putting down 20 of the home s value as a down payment Josh has made an offer of 156 000 for the house and the seller has accepted Josh is taking out a 30 year fixed rate mortgage What will Josh s monthly mortgage payment be excluding insurance and taxes PVA 156 000 8 124 800 I Y 8 5 12 7083 N 30 12 360 CPT PMT 959 60 3 Tom is buying a 3rd home to use as an income source The house will cost Tom 975 000 His mortgage interest rate is 9 7 annually His mortgage is for 25 years What are Tom s monthly mortgage payments PVA 975 000 I Y 9 7 12 8083 N 25 12 300 CPT PMT 8654 48 4 Jane is buying a new truck It will cost her 33 000 Jane s credit union is loaning her the money for the truck at an annual percentage rate of 7 2 for 72 months Calculate Jane s monthly truck payment PVA 33 000 N 72 I Y 7 2 12 6 CPT PMT 565 79 5 Calculate the monthly auto loan payments for the following loan 122 000 72 months 8 2 Annual Percentage rate PVA 122 000 N 72 I Y 8 2 12 6833 CPT PMT 2150 99 6 Calculate the monthly mortgage payment for the following loan 355 000 25 years 8 75 APR PVA 355 000 N 25 12 300 I Y 8 75 12 7292 CPT PMT 2918 61 7 Calculate the monthly payment for a vehicle that costs 45 000 if you finance 75 of the vehicle over 7 years at an annual percentage interest rate of 6 8 PVA 45 000 75 33 750 I Y 6 8 12 5667 N 7 12 84 CPT PMT 506 08
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