Instruction
1.Origination Fees. Jack needs to borrow $1,000 for one year. Bank South will give him the loan at 9%. SunCoast Bank will give him the loan at 7% with a $50 loan origination fee. First National will give him the loan at 6% with a $25 loan origination fee. Determine the total interest and fees Jack will be charged in each case. Which loan should Jack choose?
2. Amortization. Beth has just borrowed $5,000 on a four-year loan at 8% simple interest. Complete the amortization table at the bottom of the page for the first five months of the loan.
3. Add-On Interest Loan. If Beth had taken the same loan as an add-on interest loan, how would her payments differ? Why is there a difference?
4. Loan Payments. Tracy is borrowing $8,000 on a six-year, 11%, add-on interest loan. What will Tracy’s monthly payments be?
5. Mortgage Payment. Dorothy and Matt are ready to purchase their first home. Their current monthly cash inflows are $4,900, and their current monthly cash outflows are $3,650. Their rent makes up $650 of their cash flows. They would like to put 10% of their cash inflows in savings and put another $200 in their checking account for emergencies. How much of a mortgage payment can they manage under these conditions?
6. Home Price Offer. Denise and Kenny are ready to make an offer on an 1,800-square-foot home that is priced at $135,000. They investigate other homes on lots of similar size and find the following information:
A 2,400-square-foot home sold for $168,000.
A 1,500-square-foot home sold for $106,500.
An 1,100-square-foot home sold for $79,000.
What offer should they make on the home?
7. Closing Costs. Larry and Laurie have found a home and made a $125,000 offer that has been accepted. They make a down payment of 10%. Their bank charges a loan origination fee of 1% of the loan and points of 1.5% (both are based on the loan amount). Other fees include a $25 loan application fee, a $250 appraisal fee, and $350 for title search and insurance. How much cash will Larry and Laurie need at closing?
8.Total Interest Paid. Lloyd and Jean are considering purchasing a home requiring a $75,000 mortgage. The payment on a thirty-year mortgage for this amount is $498.97. The payment for a fifteen-year maturity is $674.12. What is the difference in the total interest paid between the two different maturities?