The Bridgestone's plan to buy a new house four years from now for $225,000. They'll take...
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The Bridgestone's plan to buy a new house four years from now for $225,000. They'll take out a traditional 25-year mortgage at the time of purchase. Mortgage lenders generally base the amount they will lend on the borrower's gross family income, allowing roughly 25% of income to be applied to the mortgage payment (for the year). The Bridgestone's anticipate that their annual family income will be about $57,600 at the time they will purchase the house. The mortgage interest rate is expected to be about 7.5% at that time and assume that the Bridgestone family will make the maximum monthly mortgage payment. The mortgage alone won't provide enough cash to buy the house in 4 years, and the family will need to have a down payment saved to make up the difference. They have a bank account that pays 6% compounded quarterly in which they have already saved $10,000. They plan to make monthly deposits from now until the time of the purchase to save the rest of the down-payment. How much must each monthly deposit be? The Bridgestone's plan to buy a new house four years from now for $225,000. They'll take out a traditional 25-year mortgage at the time of purchase. Mortgage lenders generally base the amount they will lend on the borrower's gross family income, allowing roughly 25% of income to be applied to the mortgage payment (for the year). The Bridgestone's anticipate that their annual family income will be about $57,600 at the time they will purchase the house. The mortgage interest rate is expected to be about 7.5% at that time and assume that the Bridgestone family will make the maximum monthly mortgage payment. The mortgage alone won't provide enough cash to buy the house in 4 years, and the family will need to have a down payment saved to make up the difference. They have a bank account that pays 6% compounded quarterly in which they have already saved $10,000. They plan to make monthly deposits from now until the time of the purchase to save the rest of the down-payment. How much must each monthly deposit be?
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To calculate the monthly deposit required to save the remaining down payment we need to determine th... View the full answer
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Posted Date:
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