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Eriilopmasa · 10-31-2007, 02:03 PM

I have been working this problem for like 3 hours, my dad can't figure it out either..can anyone help out with ANYTHING on this problem? I have a test tomorrow, and our professor didnt go over this problem with us: The Smith's want to buy a $144,000 house. Their income is $50,000 a year. They have $30,000 in savings. The current rate of interest is 7.2% APR. They would like to take out a 20 yr. loan. Taxes on this house is $2400 a yr. and the house insurance is $300 per yr. Questions: 1. Can they afford the home? 2. How much can the Smith's afford to pay/month on the house, taxes, and insurance? 3. Estimate the total pay for the house. 4. Can the Smith's make a down payment? 5. What is the house payment not including taxes and insurance? 6. How much will the Smith's pay for this house at the end of their mortgage? 7. How much interest will they pay at the end of theis mortgage? 8. What will their monthly expenses be on this house? If anyone has any input, please and thank you!

vicki · 10-31-2007, 02:03 PM

If those are all your facts, then the prof intentionally did not give you enough facts to answer the question. He/she wants you to state why AND why not the Smiths can afford the house. You have to present your answer from BOTH sets of view.

1. Depends upon their other bills. There's no way to tell from the facts presented.

2. See answer to Question 1.

3. If no money was put down, then payments are $1,138.73 each month for 240 months, or a total of $272,107.20 (the last payment was adjusted).

4. They have $30,000.00 in the bank. How did they amass that without having extra income? They can make a down payment, which will change the next answer.

5. $1,138.78 each month, assuming no down payment.

6. $272,107.20, assuming no down payment.

7. $128,107.20, assuming no down payment.

8. $1,138.78 each month for a mortgage (assuming no downpayment) + $200/month for taxes ($2,400 divided by 12) and, + $60.00/month for insurance ($600.00 divided by 12) = $1,398.78 per month for payments, insurance, and taxes

Ross · 10-31-2007, 02:03 PM

you can get the mortgage calulator off my website: www.kcnewhomerealty.com

Free of charge.

UFOexist · 10-31-2007, 02:03 PM

You can't really answer these in order:

1) Yes, unless they spend wildly and foolishly on other things. I would suggest a $4000 downpayment.

2) General rule of thumb is 1/3 of income can be used for PITI (principal, interest, taxes, and insurance) which in this case $1,388.88. (50,000/3/12) But this is a general guideline, not a mathematical certainty.

5) House payment PI (principal and interest only) for a 144,000 home at 7.2% over 20 years is $1,133.78 per month. That is assuming no downpayment. If they put 4,000 down, then it is $1,102.29. The downpayment you choose will make a difference in this answer.

3) With a downpayment of $4000, a sale price of $144,000, an interest rate of 7.2% on a 20 year loan, plus the $2400 for taxes and $300 for insurance (PITI), the PITI is $1327.29. Multiply that by 240 months and you get $318,549.60.

4) Yes, I am going to use $4000 in my answer, but they can afford more if they want to reduce their monthly payments. I would suggest they use anywhere between $4000 and $20000 for a downpayment. Take this from their savings - but leave a little for emergencies, moving costs, utility deposits, and new furniture and curtains.

7) At the end of the mortgage, the homeowner will have paid $124,529.36 in interest alone.

6) Because the taxes and insurance are not actually "paying for the house" and they were already included in the answer to #3, I will leave them out of this part of the answer. The total for the house itself is going to be $144,000 (including the downpayment). The total of the principal and the interest comes to: $268,529.36.

8) Monthly expenses - PITI (principal, interest, taxes and insurance) = $1,327.29. This is in line with the estimate in answer #2 which is based on their income.

You should become familiar with amortization tables if you need to do this kind of homework. If you have Microsoft Excel, you can create your own spreadsheet and just pop the numbers in. I belive there is one already built that comes with Excel. Search for help on the IPMT Worksheet Calculation.

You can also use one of the mortgage calculators on my website: http://www.HouseHuntingHound.com
or
http://www.pattiannkasper.com/mortgage_calculators_50163.html

10-31-2007, 02:03 PM	#1
Eriilopmasa Greenhorn Join Date: Oct 2007 Posts: 42 Rep Power: 5	Help! Who knows how to calculate loan payments? It's for a college math class? I have been working this problem for like 3 hours, my dad can't figure it out either..can anyone help out with ANYTHING on this problem? I have a test tomorrow, and our professor didnt go over this problem with us:<br /><br />The Smith's want to buy a $144,000 house. Their income is $50,000 a year. They have $30,000 in savings. The current rate of interest is 7.2% APR. They would like to take out a 20 yr. loan. Taxes on this house is $2400 a yr. and the house insurance is $300 per yr.<br /><br />Questions:<br />1. Can they afford the home?<br />2. How much can the Smith's afford to pay/month on the house, taxes, and insurance?<br />3. Estimate the total pay for the house.<br />4. Can the Smith's make a down payment?<br />5. What is the house payment not including taxes and insurance?<br />6. How much will the Smith's pay for this house at the end of their mortgage?<br />7. How much interest will they pay at the end of theis mortgage?<br />8. What will their monthly expenses be on this house?<br /><br />If anyone has any input, please and thank you!<br />

10-31-2007, 02:03 PM	#4
UFOexist Greenhorn Join Date: Jul 2006 Posts: 11 Rep Power: 0	Help! Who knows how to calculate loan payments? It's for a college math class? You can't really answer these in order: 1) Yes, unless they spend wildly and foolishly on other things. I would suggest a $4000 downpayment. 2) General rule of thumb is 1/3 of income can be used for PITI (principal, interest, taxes, and insurance) which in this case $1,388.88. (50,000/3/12) But this is a general guideline, not a mathematical certainty. 5) House payment PI (principal and interest only) for a 144,000 home at 7.2% over 20 years is $1,133.78 per month. That is assuming no downpayment. If they put 4,000 down, then it is $1,102.29. The downpayment you choose will make a difference in this answer. 3) With a downpayment of $4000, a sale price of $144,000, an interest rate of 7.2% on a 20 year loan, plus the $2400 for taxes and $300 for insurance (PITI), the PITI is $1327.29. Multiply that by 240 months and you get $318,549.60. 4) Yes, I am going to use $4000 in my answer, but they can afford more if they want to reduce their monthly payments. I would suggest they use anywhere between $4000 and $20000 for a downpayment. Take this from their savings - but leave a little for emergencies, moving costs, utility deposits, and new furniture and curtains. 7) At the end of the mortgage, the homeowner will have paid $124,529.36 in interest alone. 6) Because the taxes and insurance are not actually "paying for the house" and they were already included in the answer to #3, I will leave them out of this part of the answer. The total for the house itself is going to be $144,000 (including the downpayment). The total of the principal and the interest comes to: $268,529.36. 8) Monthly expenses - PITI (principal, interest, taxes and insurance) = $1,327.29. This is in line with the estimate in answer #2 which is based on their income. You should become familiar with amortization tables if you need to do this kind of homework. If you have Microsoft Excel, you can create your own spreadsheet and just pop the numbers in. I belive there is one already built that comes with Excel. Search for help on the IPMT Worksheet Calculation. You can also use one of the mortgage calculators on my website: http://www.HouseHuntingHound.com or http://www.pattiannkasper.com/mortgage_calculators_50163.html

10-31-2007, 02:03 PM	#2
vicki Greenhorn Join Date: Jul 2007 Posts: 20 Rep Power: 5	Help! Who knows how to calculate loan payments? It's for a college math class? If those are all your facts, then the prof intentionally did not give you enough facts to answer the question. He/she wants you to state why AND why not the Smiths can afford the house. You have to present your answer from BOTH sets of view. 1. Depends upon their other bills. There's no way to tell from the facts presented. 2. See answer to Question 1. 3. If no money was put down, then payments are $1,138.73 each month for 240 months, or a total of $272,107.20 (the last payment was adjusted). 4. They have $30,000.00 in the bank. How did they amass that without having extra income? They can make a down payment, which will change the next answer. 5. $1,138.78 each month, assuming no down payment. 6. $272,107.20, assuming no down payment. 7. $128,107.20, assuming no down payment. 8. $1,138.78 each month for a mortgage (assuming no downpayment) + $200/month for taxes ($2,400 divided by 12) and, + $60.00/month for insurance ($600.00 divided by 12) = $1,398.78 per month for payments, insurance, and taxes

10-31-2007, 02:03 PM	#3
Ross Greenhorn Join Date: Jul 2006 Posts: 18 Rep Power: 0	Help! Who knows how to calculate loan payments? It's for a college math class? you can get the mortgage calulator off my website: www.kcnewhomerealty.com Free of charge.

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