Benjamin and Sarah purchased a four-bedroom house for $170,000 in a nice fam-ily neighborhood. They were among
Question:
Benjamin and Sarah purchased a four-bedroom house for $170,000 in a nice fam-ily neighborhood. They were among the first families to purchase a home in this new subdivision. The money received from Sarah’s parents as a wedding gift was used for the down payment. The mortgage payment is $1,066.52 per month. The interest rate is 7.5%. The original mortgage was $152,531.47, and they have made 29 payments. Utilities range from $400–500 per month.
Although the original value of the house was $170,000, a recent appraisal valued the house at $149,000. The decrease in value did not leave enough equity for the Reddings to be approved for a home equity loan. If the Reddings wanted to refinance (80% of the fair market value of the home), the 3% closing costs would have to be paid at closing and not financed.
Expert Answer:
Q 9 Appraised value 149000 Loan value LTV x Fair value 80 x 149000 119200 Balance ... View the full answer
