Project #82702 - Home ownership and mortgage payments

Chapter 15

 

 

 

 

 

1)

 

A home is considered personal property, rather than real property, because the home is used for personal use. (T or F)

 

 

 

A True B False

 

 

 

 

 

 

 

 

 

2)

 

In the event a foreclosure sale does not provide a lender with all the money due, the lender can, in all states, collect the deficiency from the borrower. (T or F)

 

 

 

A True B False

 

 

 

 

 

 

 

 

 

3)

 

Holly Bing stops making her mortgage payments and her home sells at a foreclosure sale for $152,000. Holly owes $131,500 on her first mortgage and owes $31,000 on a second mortgage. How much of the $152,000 will the second lender get?

 

 

 

A $131,500 B $20,500 C $10,500 D $31,500

 

 

 

 

 

 

 

 

 

4)

 

Refer to problem 3. Assume the home sells for $175,000. How much will Holly get?

 

 

 

A $175,000 B $43,500 C $12,500 D Nothing

 

 

 

 

 

 

 

 

 

5)

 

Mortgage interest rates change depending on supply and demand.

 

 

 

A True B False

 

 

 

 

 

 

 

 

 

6)

 

Tim and Sonia are getting prequalified for a mortgage loan. The lender has qualifying ratios of 29/41. Tim earns $2,200 a month and Sonia earns $2,400 a month. The lender estimates property taxes at $2,000 a year and insurance at $550. Tims car payment is $310; Sonias car is paid off. They each have a minimum credit card payment of $30. What is the maximum monthly payment they qualify for?

 

 

 

A $1,334 B $1,121.50 C $1,886 D $1,303.50

 

 

 

 

 

 

 

 

 

For Problems 7-10, assume you get a 30-year $170,000 mortgage loan at 7.5% interest, with monthly payments of $1,188.66.

 

 

 

 

 

7)

 

Calculate the total interest for the entire 30 years

 

 

 

A $427,917.60 B $12,750 C $382,500 D $257,917.60

 

 

 

 

 

 

 

 

 

8)

 

The lender requires an escrow account. Property taxes are currently $1,950 per year and insurance is $550. What additional amount is required each month for taxes and insurance (TI)?

 

 

 

A $162.50 B $2,500 C $1,396.99 D $208.33

 

 

 

 

 

 

 

 

 

9)

 

What is your total monthly payment (PITI)?

 

 

 

A $208.33 B $1,396.99 C $3,688.67 D $1,188.66

 

 

 

 

 

 

 

 

 

10)

 

Your payment will likely change in the future, as property taxes and insurance change. (T or F)

 

 

 

A True B False

 

 

 

 

 

 

 

 

 

 

 

Unit 15.2 Paying off a mortgage loan and increasing equity

 

 

 

 

 

11)

 

Refer to Problems 7-10. Calculate the balance after the second monthly payment.

 

 

 

A $169,746.89 B $126.95 C $1,061.71 D $169,873.84

 

 

 

 

 

 

 

 

 

12)

 

The final payment of a mortgage loan is always the same as the other payments. (T or F)

 

 

 

A True B False

 

 

 

 

 

 

 

 

 

13)

 

It is a good idea to prepare a printed amortization schedule for a car loan. (T or F)

 

 

 

A True B False

 

 

 

 

 

 

 

 

 

14)

 

You bought a home 8 years ago for $410,000 and got a $380,000 mortgage loan. You spent $34,000 on improvements. The balance on your first mortgage is currently $340,100 and you have a second mortgage with a balance of $24,400. Your home is now worth $575,000. Calculate your equity.

 

 

 

A $575,000 B $210,500 C $234,900 D $550,600

 

 

 

 

 

 

 

 

 

 

 

Unit 15.3 Amortization with a financial calculator

 

 

 

 

 

For Problems 15-19, assume you get a 25-year $130,000 mortgage loan at 6.5% interest.

 

 

 

 

 

15)

 

What is your monthly payment?

 

 

 

A $10,657.59 B $5,574.08 C $433.33 D $877.77

 

 

 

 

 

 

 

 

 

16)

 

What is the interest for the first monthly payment?

 

 

 

A $173.60 B $704.17 C $877.77 D $433.33

 

 

 

 

 

 

 

 

 

17)

 

What is the balance after payment 77?

 

 

 

A $129,826.40 B $130,000 C $51,056.30 D $113,468.01

 

 

 

 

 

 

 

 

 

18)

 

Using your amortization registers, calculate the interest for the entire 25-year term?

 

 

 

A $130,000 B $133,330.73 C $17,309.99 D $125,365.74

 

 

 

 

 

 

 

 

 

19)

 

What is the exact amount of your final monthly payment?

 

 

 

A $704.17 B $877.77 C $877.50 D $878.04

 

 

 

 

 

 

 

 

 

For Problems 20-24, assume you get a 20-year $600,000 mortgage loan at 7.5% interest. Assume your first monthly payment is due March 1.

 

 

 

 

 

20)

 

What is your monthly payment?

 

 

 

A $4,833.56 B $2,500 C $32,007.58 D $45,000

 

 

 

 

 

 

 

 

 

21)

 

Assuming your first monthly payment is due March 1, what is the interest for the first calendar year?

 

 

 

A $44,543.59 B $11,145.48 C $37,190.12 D $10,533.24

 

 

 

 

 

 

 

 

 

22)

 

What is the interest for the second calendar year?

 

 

 

A $14,504.01 B $43,678.32 C $15,567.15 D $47,269.13

 

 

 

 

 

 

 

 

 

23)

 

After making 120 payments (half of the 240 total payments), what is your balance?

 

 

 

A $300,000 B $192,798,15 C $387,229.05 D $407,201.85

 

 

 

 

 

 

 

 

 

24)

 

With regular scheduled monthly payments, how many payments must be made until the balance is $300,000 or less?

 

 

 

A 120 months B 162 months C 78 months D 180 months

 

 

 

 

 

 

 

 

 

 

 

Unit 15.4 Repayment variations and loan charges

 

 

 

 

 

25)

 

You get a 30-year ARM at a rate of 4.75%. The rate is adjusted each year to the 1-year T-bill rate plus 0.75%. The loan has a 1% annual cap. One year later the T-bill rate is 5.13%. What rate will you pay the second year?

 

 

 

A 5.88% B 5.13% C 5.75% D 4.75%

 

 

 

 

 

 

 

 

 

26)

 

Refer to Problem 25. Your monthly payment will increase for year 2. (T or F)

 

 

 

A True B False

 

 

 

 

 

 

 

 

 

27)

 

You get an interest-only mortgage loan of $215,000 at 8.25%. For the first 2 years, your monthly payments are interest-only. What is your monthly payment for those 2 years?

 

 

 

A $17,737.50 B $1,478.13 C $1,615.22 D $170,000

 

 

 

 

 

 

 

 

 

28)

 

Refer to Problem 27. What is the mortgage balance after making 22 monthly payments?

 

 

 

A $212,043.74 B $213,521.87 C $213,384.78 D $215,000

 

 

 

 

 

 

 

 

 

29)

 

You get a $310,000 mortgage loan at 6.75% interest. Your monthly payment (PI) is $1,650. Calculate the balance after the first monthly payment.

 

 

 

A $308,350 B $308,256.25 C $310,093.75 D $309,906.25

 

 

 

 

 

 

 

 

 

30)

 

You apply for a home-equity loan. You have a first mortgage, with a current balance of $213,800. Based on an appraisal of $340,000 and a 75% LTV, what is the maximum line of credit you can get?

 

 

 

A $41,200 B $255,000 C $126,200 D $94,650

 

 

 

 

 

 

 

 

 

31)

 

An origination fee is used to buy down the interest rate? (T or F)

 

 

 

A True B False

 

 

 

 

 

 

 

 

 

32)

 

You get a $550,000 mortgage loan with 1 points. What dollar amount do you pay for points?

 

 

 

A $1,000 B $1,250 C $6,875 D $5,500

 

 

 

 

 

 

 

 

 

33)

 

Calculate total loan costs on a $145,000 loan with a % origination fee, 3/4 of a point, $500 brokerage fee, $300 document preparation fee, $375 appraisal fee, $552 title insurance fee, $125 closing fee, and $70 for recording.

 

 

 

A $1,812.50 B $3,009.50 C $1,922 D $3,734.50

 

 

 

 

 

 

 

 

 

34)

 

You get a 7.125% mortgage loan with front-end loan charges of $3,800. Your APR be:

 

 

 

A Less than 7.125% B Exactly 7.125% C Greater than 7.125%

 

 

 

 

 

 

 

 

 

 

 

Challenge problems

 

 

 

 

 

For Problems 35-43, follow the adventures of Devin and Merri Robles.

 

 

 

 

 

35)

 

Devin and Merri are getting prequalified. Devin earns $1,300 a month and Merri earns $1,000 a month. Merri receives child support of $700 a month from an ex-husband. Devin gets $150 annual interest from some bonds he owns. Based on the price range they are thinking about, property taxes are $1,150 per year and insurance is $510 per year. Based on a front-end ratio of 29%, what is the maximum mortgage payment they qualify for?

 

 

 

A $735.30 B $667.00 C $528.67 D $873.63

 

 

 

 

 

 

 

 

 

36)

 

Devin has a car payment of $120 and a credit card payment of $25. Merri has a car payment of $110 and a credit card payment of $10. Based on a back-end ratio of 41%, what is the maximum mortgage payment they qualify for?

 

 

 

A $1,235.13 B $735.30 C $1,096.80 D $831.80

 

 

 

 

 

 

 

 

 

37)

 

What is their maximum monthly mortgage payment?

 

 

 

A $1,235.13 B $735.30 C $1,096.80 D $831.80

 

 

 

 

 

 

 

 

 

38)

 

They buy a home for $130,000 and get a 30-year $115,000 mortgage loan at 4.5% interest, with a monthly payment (PI) of $582.69. The lender requires an escrow account. Property taxes on the home they end up buying are $1,144 per year and insurance is $510 a year. Calculate their total (PITI) monthly payment.

 

 

 

A $582.69 B $720.52 C $796.52 D $658.69

 

 

 

 

 

 

 

 

 

39)

 

Devin and Merri sign the loan documents on March 23 and are required to deposit $340 into the escrow account at that time. Their first payment is due May 1. The lender pays property taxes of $1,144 from their escrow account on November 22. Calculate their escrow balance at the end of the calendar year.

 

 

 

A $340 B $1,484 C $1,102.64 D $298.64

 

 

 

 

 

 

 

 

 

40)

 

Calculate their mortgage balance after their first monthly payment.

 

 

 

A $114,848.56 B $113,144.76 C $114,417.31 D $114,793.11

 

 

 

 

 

 

 

 

 

41)

 

Two years after buying the home, they borrow $18,000 on a home-equity loan to upgrade the kitchen. Four years after buying the home, their first mortgage balance is paid down to $107,052 (rounded), and their home-equity loan has a balance of $15,200. They get an appraisal, showing the home is worth $140,000. What is their equity in the home?

 

 

 

A $17,748 B $25,748 C $32,948 D $7,748

 

 

 

 

 

 

 

 

 

42)

 

Assume that a year later, Devin loses his job and they get behind on their mortgage payments. The balance on the first mortgage (including court costs and attorney fees) is $111,100 and the balance on the second mortgage (home-equity loan) is $17,500. The home is sold at a foreclosure sale for $125,000. Who gets the money from the sale?

 

 

 

A The first lender gets $111,100; the second lender gets $17,500

 

B The first lender gets $111,100; the second lender gets nothing

 

C The first lender gets $111,100; the second lender gets $13,900

 

D The first lender gets $107,990; the second lender gets $17,010

 

 

 

 

 

 

 

 

 

43)

 

Assume, instead, that Devin and Merri weather the storm and bring their payments current. During the next several years, home values increase dramatically, and they sell their home for $170,000. They owe $102,509 on the first mortgage and $4,000 on the second. They pay a 6% real estate commission and other expenses of $2,300. What amount will Devin and Merri receive from the sale?

 

 

 

A $157,500 B $54,991 C $50,991 D $65,191

 

Subject Mathematics
Due By (Pacific Time) 09/28/2015 12:00 am
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