1. They financed the loan balance of $306,500 using an adjustable rate mortgage (ARM). The monthly...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. They financed the loan balance of $306,500 using an adjustable rate mortgage (ARM). The monthly payment of $1100 did not include taxes and insurance. In fact, the monthly payment was all interest, meaning that nothing was applied against the debt each month. Find the monthly payment given taxes of S640) per year and insurance of $980 per year. 2. At the time of the purchase in 2008, the Dustons were told that the interest rate on their ARM loan would reset in 2011, so they knew the payments might increase. However, they were not worried since they assumed that their incomes and also the value of the house would be higher by then. But home prices fell across much of the country as did the value of their home, By 2011, an appraiser estimated that it was worth only 75% of the original loan balance of $306,500, which they still owed. They were underwater on their home! Find out what the house was worth in 2011 and the amount by which they were underwater. 3. The Dustons were shocked to find out that they would have to come up with $76,625 to pay off the bank loan to sell their home. They were further shocked to find out they would also need to come up with an additional $23,000 to pay various expenses, such as the real estate commission related to the sale of their home. Estimate the total amount they would 3. have to pay to sell their home, rounded to the nearest thousand. 4. The Dustons did not have the funds needed, so they asked about refinancing the loan bal- ance of $306,500. At first, the bank wanted them to pay off the loan, but it finally agreed to try to work to refinance it. The Dustons felt trapped! It was difficult to understand that they were underwater by so much given that they had made every payment on time for 3 years. With the help of a government program designed to help underwater homeowners current on their mortgage payments, the bank agreed to refinance $285,000 on the home on a 30- year fixed mortgage at 5%. The difference between the debt of $306,500 and $285.000 was essentially forgiven due to the government program. Find the new home payment not including taxes and insurance. 1. They financed the loan balance of $306,500 using an adjustable rate mortgage (ARM). The monthly payment of $1100 did not include taxes and insurance. In fact, the monthly payment was all interest, meaning that nothing was applied against the debt each month. Find the monthly payment given taxes of S640) per year and insurance of $980 per year. 2. At the time of the purchase in 2008, the Dustons were told that the interest rate on their ARM loan would reset in 2011, so they knew the payments might increase. However, they were not worried since they assumed that their incomes and also the value of the house would be higher by then. But home prices fell across much of the country as did the value of their home, By 2011, an appraiser estimated that it was worth only 75% of the original loan balance of $306,500, which they still owed. They were underwater on their home! Find out what the house was worth in 2011 and the amount by which they were underwater. 3. The Dustons were shocked to find out that they would have to come up with $76,625 to pay off the bank loan to sell their home. They were further shocked to find out they would also need to come up with an additional $23,000 to pay various expenses, such as the real estate commission related to the sale of their home. Estimate the total amount they would 3. have to pay to sell their home, rounded to the nearest thousand. 4. The Dustons did not have the funds needed, so they asked about refinancing the loan bal- ance of $306,500. At first, the bank wanted them to pay off the loan, but it finally agreed to try to work to refinance it. The Dustons felt trapped! It was difficult to understand that they were underwater by so much given that they had made every payment on time for 3 years. With the help of a government program designed to help underwater homeowners current on their mortgage payments, the bank agreed to refinance $285,000 on the home on a 30- year fixed mortgage at 5%. The difference between the debt of $306,500 and $285.000 was essentially forgiven due to the government program. Find the new home payment not including taxes and insurance.
Expert Answer:
Answer rating: 100% (QA)
Solution Given that 1 The financed loan balane of 306 500 The monthly payment of ll00 ... View the full answer
Related Book For
Personal Finance An Integrated Planning Approach
ISBN: 978-0136063032
8th edition
Authors: Ralph R Frasca
Posted Date:
Students also viewed these finance questions
-
An adjustable rate mortgage has a yearly interest rate adjustment cap of 1 percent. If the indexed rate moves up by 112 percent in the first year and 12 percent in the second year, how much can the...
-
An adjustable rate mortgage allows the rate of interest to fluctuate over the term of the loan, depending on economic conditions. A fixed rate mortgage holds the rate of interest constant. Which...
-
An adjustable rate mortgage with a teaser start rate of 1.5%, an index of six month LIBOR, a margin of 2.0%, and periodic and lifetime caps of 2/6 with semi-annual adjustments, would have a maximum...
-
Incorporated in 1990, Raju Diary Ltd is one of the leading manufacturers and marketers of diary-based branded foods in India. In the initial years, its operations were restricted only to the...
-
Oregon Corporation has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Reform Act. Its creditors are considering an attempt to force liquidation. The company currently...
-
Use the option data from July 13, 2009 in the following table to determine the rate Google would have paid if it had issued $128 billion in zero-coupon debt due in January 2011. Suppose Google...
-
Work sheets for Bedthings, Inc., a manufacturing firm, are included in the Working Papers. Use the information for April from Work Together 20-2. Work independently to complete the following...
-
Zimmer Chemical Co. has chemical manufacturing facilities around the world. Recently, Zimmer erected a new facility in South Korea at a cost of $48 million and plans to operate the new facility for a...
-
What are the dimensions of motivation in the article titled Like a Boss: A College Course for First-Time Managers
-
KEW Enterprises began operations in January 20X1 to manufacture a hand sanitizer that promised to be more effective and gentler on the skin than existing products. Family members, one of whom was...
-
The university wishes to connect a new building to the network. The building is 800m away from the closest networking rack on campus. What type of cable should be used to ensure high speed (10Gb)...
-
Ivanhoe Inc. provided several entertainment services to Pronghorn Corporation in the past. On January 1, 2023, when the receivable for the past services was due, Pronghorn was unable to pay the...
-
Question 1 The transactions of Samson Company for the month of March, 2023 are given below: a. Samson, owner, invested $100,750 cash in the company. b. The company purchased supplies for $1,550 cash....
-
Describe the complexity of managing multinational corporations and the risks they face when conducting international deals that are different from domestic deals? You have a friend who tells you that...
-
Universal Travel uses the contribution margin income statement internally. Universal's first quarter results are as follows: Universal's relevant range is sales of between $130,000 and $650,000....
-
Rebecca holds 100 shares of Gotchas stock that she purchased for $3,400 several years ago. In a merger of Gotchas into Solis, Inc., Rebecca exchanges her 100 Gotchas shares for 1,000 Solis shares and...
-
1. Question 1: ALDI and similar stores offer different customer experience. Do you think a similar business model would work in other industries? Please give examples to illustrate your answer....
-
In July 2013, cnet.com listed the battery life (in hours) and luminous intensity (i. e., screen brightness, in cd/m2) for a sample of tablet computers. We want to know if screen brightness is...
-
Why is it wise to review your auto policy before you rent a car?
-
Explain market, limit, and stop orders. In what situations would investors use stop orders? Explain.
-
What is the difference between a closed-end lease and an open-end lease?
-
The supply of health care has _________ slowly since 1960.
-
The chronically ill are _________ likely to demand insurance than people in good health.
-
The _________ cause a disproportionate share of health care expenses.
Study smarter with the SolutionInn App