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Contemporary Mathematics

11.5 Classwork

1. Sally Jacobs wishes to buy a house selling for $250,000. Her credit union requires her to make a 15% down payment. The current mortgage rate is 4.5%.

a. Determine the amount of the required down payment.

b. Determine the monthly mortgage payment for a 15-year loan with a 15% down payment.

2. Martha Cutler is buying a house selling for $195,000. The bank is requiring a minimum down payment of 20%. To obtain a 20-year mortgage at 6% interest, she must pay 2 points at the time of closing.

a. What is the required payment?

b. With the 20% down payment, what is the amount of the mortgage?

c. What is the cost of the 2 points?

3. Pieter and Helga Guenther’s gross monthly income is $3200. They have 25 remaining car payments of $335. The Guenthers are applying for a 15-year, $150,000 mortgage at 5% interest to buy a new house. The taxes and insurance on the house are $225 per month.

a. Determine the Guenther’s adjusted monthly income.

b. Determine the maximum monthly payment a lender feels the Guenthers can afford.

c. Determine the monthly mortgage payment plus taxes and insurance.

d. Do the Guenthers qualify for this mortgage?

4. Ingrid Holzner obtains a 30-year, $63,750 conventional mortgage at 8.5% on a house selling for $75,000. Her monthly payment, including principal and interest, is $490.24.

a. Determine the total amount Ingrid will pay for her house.

b. How much of the cost will be interest?

c. How much of the first payment on the mortgage is applied to the principal?

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