Question

Can you help me figure out how to solve this??

Answer 1

The Solution:

Given that the mortgage value is $170,000, and 1/5 of the mortgage value as Down Payment.

a.

We are asked to find the Down Payment.

$\text{ Down Payment=}\frac{1}{5}\times170000=\text{ \ 34,000}$

Thus, the Down Payment is $34,000

b.

The amount (in dollars) of the mortgage that Bradys is applying for is:

$\text{ Amount of Mortgage =170,000-34,000}=\text{ \ 136,000}$

Therefore, the amount (in dollars) of the mortgage that Bradys is applying for is $136,000

c.

For every $1000, the interest rate charged is $5.37.

So, for $136,000, Bradys is requesting for

$\begin{gathered} \text{ \ 1000 = \ 5.37} \\ \\ \text{ \ 136,}000=136\times5.37=\text{ \ 730.32} \end{gathered}$

Therefore, the amount for Bradys' monthly payment of the principal and the interest is $730.32

d.

The total amount of interest that will be paid over the life of the loan is:

$\text{ Total Interest = Total Payment - Total Loan}$

In this case,

$\begin{gathered} \text{ Total payment=payment for 30 years=monthly payment}\times12\times30 \\ \\ \text{Total Payment =730}.32\times12\times30=\text{ \ 262915.20} \end{gathered}$

Total Loan = $136,000

So,

$\text{Total Interest =262915.20 - 136000 = \ 126915.20}$

Thus, the total amount of interest paid over the life of the loan is $126915.20

e.

The total monthly payment that include principal, interest, property tax and property insurance is calculated as below:

$\text{ Monthly payment of property tax =}\frac{\text{ Yearly tax}}{12}=\frac{1710}{12}=\text{ \ 142.50}$

$\begin{gathered} \text{ Monthly payment of property Insurance =}\frac{\text{ Yearly insurance charge}}{12}=\frac{1458}{12} \\ \\ \text{Monthly payment of property Insurance = \ 121.50} \end{gathered}$

$\text{Monthly payment of principal and interest = \ 730.32}$

Thus, the total monthly payment is

$730.32+121.50+142.50=730.32+264=\text{ \ 994.32}$

Therefore, the total monthly payment is $994.32

f. Not needed by the user.

g.

Given that to qualify for the mortgage payment, 1/4 of the family monthly income must exceed the monthly payment for the mortgage loan.

The range of monthly income of $4000 and above is required to qualify for this size mortgage payment. This is because:

$\begin{gathered} \frac{1}{4}\times4000=\text{ \ 1000 } \\ \\ \text{ Monthly payment = \ 994.32} \\ \text{ Since 1000 > 994.32} \\ It\text{ follows that \ 4000 is enough to qualify one for the mortgage loan.} \end{gathered}$

Therefore, a monthly income of $4000 is good