Sally and John want to buy a house. They have selected a house for $420,000 in La
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Question:
Sally and John want to buy a house. They have selected a house for $420,000 in La Mesa, CA, a suburb of San Diego. You are going to figure out how much buying this house will cost them given the following scenarios:
- They have a 20% down payment, so they will not need Private Mortgage Insurance (PMI). They are offered a 4.0% loan fixed rate for 30 years. What is their down payment, monthly payment, and property taxes for that city?
- They only have a 5% down payment, so they will need PMI. They are offered a 4.0% loan fixed rate for 30 years. What are their down payment, monthly payment with PMI, and property taxes for that city? When will their PMI payments stop?
- They only have a 5% down payment, so they will need PMI. They selected an adjustable-rate mortgage that is 3%, interest-only for the first 5 years. What is their down payment, monthly payment with PMI, and property taxes for that city? Is this a viable option – what are the risks?
- The house they have chosen was last sold in the 1990s for $150,000, so the current selling price is $270,000 higher than last recorded. What is supplemental property tax and will they owe any?
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324664553
Concise 6th Edition
Authors: Eugene F. Brigham, Joel F. Houston
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