Contemporary Mathematics

Mathematics

Quiz 14 :

Mortgages

Quiz 14 :

Mortgages

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A chart that shows the month-by-month breakdown of each mortgage payment into interest and principal is known as a(n) __________ schedule.
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An amortization schedule is a chart that shows the status of the mortgage loan after each payment. The schedule illustrates month how much of the mortgage payment is interest and how much is left to reduce to principal. The schedule also shows the outstanding balance of the loan after each payment.
Consider an example; prepare a amortization schedule for the first three months of the
img mortgage at
img for 30 years.
At first, calculate the monthly payment using the three steps
1. First find the number of
img financed
img 2. Using table locate the table factor, monthly payment per
img financed.
The entry in the above table for
img for 30-years is
img .
3. Now, calculate the monthly payment
img Therefore, the monthly payment is
img .
Next, use this monthly payment to complete the amortization schedule.
Month 1:
1. Calculate the amount of interest for the current month using
img Where,
img is the current outstanding balance of the loan,
img is the annual Interest rate and
img is
img . So,
img 2. Calculate the portion of payment used to reduce principal by using the formula below
img 3. Calculate the outstanding balance of the mortgage loan by using the formula below
img Now, repeat the steps 1, 2 and 3 for two more payments
Month 2:
1.
img 2.
img 3.
img 4.
1.
img 2.
img 3.
img Therefore, the amortization schedule is
img img A chart that shows the month-by-month breakdown of each mortgage payment into interest and principal is known as a(n) amortization schedule.

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For the following second mortgage applications, calculate the percentage of appraised value and the potential credit. img img
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Consider appraised value is
img , lender percentage is
img and balance of first mortgage is
img .
Step 1. First find the percentage of appraised value
img Step 2. Next, find the potential amount of credit available
img Therefore,
img

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Mortgage __________ points are an extra charge frequently added to the cost of a mortgage.
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Extra charges known as mortgage discount points are frequently added to the cost of a loan as a rate adjustment factor. This allows lenders to increase their yield without showing an increase in the mortgage interest rate. Each discount points is equal to
img of the amount financed.
Consider an example, suppose a person is purchasing a
img home. The down pay is
img , and the balance will be financed with a 25-year fixed-rate mortgage at
img and
img discount points.
Here,
img And,
img Extra charges i.e. discount points the person has to give to the lender is
img img Mortgage discount points are an extra charge frequently added to the cost of a mortgage.

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For the following second mortgage applications, calculate the percentage of appraised value and the potential credit. img img
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A(n) __________ is a loan in which real property is used as security for a debt.
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Use Table 14-1 to calculate the monthly principal and interest and calculate the monthly PITI for the following mortgages. img img
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You are one of the branch managers of the Insignia Bank. Today two loan applications were submitted to your office. Calculate the requested information for each loan. img img
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A(n) __________ account is a bank account used by mortgage lenders to accumulate next year's property taxes and hazard insurance.
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Suzanne Arthurs purchased a home with a $146,100 mortgage at 6.5% for 30 years. Calculate the monthly payment and prepare an amortization schedule for the first three months of Suzanne's loan. img
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The official document representing the right of ownership of real property is known as the __________ or the __________.
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Land, including permanent improvements on that land, is known as __________.
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For the following mortgage applications, calculate the housing expense ratio and the total expense ratio. img img
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List four mortgage loan closing costs.
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You are one of the branch managers of the Insignia Bank. Today two loan applications were submitted to your office. Calculate the requested information for each loan. img img
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Today most mortgage payments include four parts, abbreviated PITI. Name these parts.
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For the following mortgage applications, calculate the housing expense ratio and the total expense ratio. img img
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Use Table 14-1 to calculate the monthly principal and interest and calculate the monthly PITI for the following mortgages. img img
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A mortgage in which the interest rate changes periodically, usually in relation to a predetermined economic index, is known as a(n) __________ rate mortgage.
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For the following second mortgage applications, calculate the percentage of appraised value and the potential credit. img img
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The final step in a real estate transaction is a meeting at which time the buyer pays the agreed-upon purchase price and the seller delivers the ownership documents. This meeting is known as the __________.
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