Consumer math Worksheet Mortgage payment & GDSR calculations ...

[Pages:3]Consumer math Worksheet Mortgage payment & GDSR calculations

Solutions

Jason Mink would like to buy a house for $240,000. He is able to make a down payment of 20%. The bank will finance this property at a rate of 8.75% over 25 years. His annually gross income is $84,000. The monthly property taxes are $445 and monthly utility costs are $100. He does not have other debt. Calculate: a) The monthly mortgage payment b) The gross debt services ratio. c) The total interest in the five years. d) The total principal paid in the five years. e) The total mortgage remained after five years. (Using Excel to calculate question c, d, and e.)

Solution: a) The monthly mortgage payment. Step1, down payment = $240,000 20% $48,000

The total Mortgage = $240,000 $48,000 $192,000

Step2, check Table 4 Amortization Table (page 27 Essential Mathematics 12) The amortization factor, with 8.75% Interest rate over 25 years, is $ 8.12 per $1000

mortgage.

Monthly mortgage payment $8.12$192,000 $1559.04 $1000

b) Step1, his monthly income is: $84,000 12 $7,000

Step2, The gross debt services ratio

monthly mortgage payment monthly property payment monthly heating cos ts 100% gross monthly income

$1559.04 $445 $100 100% 30.06% less than 32% $7000

Since the gross debt service ratio is 30.06% (less than 32%), and he does not have other debt his application would likely be accepted.

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Consumer math Worksheet

Mortgage payment & GDSR calculations

Solutions

Solutions: c),d), and e)

House price

$240,000

Downpayment

$48,000

20% of the house value

Mortgage

$192,000

Interest rate

8.75%

25 years Amortization period

Amotization factor $8.12

per $1000 mortgage

Monthly payment $1,559.04

Number Payment

Monthly payment

Interest Payment

Principal Payment

0

1

$1,559.04

$1,400.00

2

$1,559.04

$1,398.84

3

$1,559.04

$1,397.67

4

$1,559.04

$1,396.50

5

$1,559.04

$1,395.31

6

$1,559.04

$1,394.12

7

$1,559.04

$1,392.91

8

$1,559.04

$1,391.70

9

$1,559.04

$1,390.48

10

$1,559.04

$1,389.25

11

$1,559.04

$1,388.02

12

$1,559.04

$1,386.77

13

$1,559.04

$1,385.51

14

$1,559.04

$1,384.25

15

$1,559.04

$1,382.97

16

$1,559.04

$1,381.69

17

$1,559.04

$1,380.40

18

$1,559.04

$1,379.09

19

$1,559.04

$1,377.78

20

$1,559.04

$1,376.46

21

$1,559.04

$1,375.13

22

$1,559.04

$1,373.79

23

$1,559.04

$1,372.44

24

$1,559.04

$1,371.08

25

$1,559.04

$1,369.70

26

$1,559.04

$1,368.32

The 27th to 60th month Continue on the next page.

$159.04 $160.20 $161.37 $162.54 $163.73 $164.92 $166.13 $167.34 $168.56 $169.79 $171.02 $172.27 $173.53 $174.79 $176.07 $177.35 $178.64 $179.95 $181.26 $182.58 $183.91 $185.25 $186.60 $187.96 $189.34 $190.72

Unpaid balance

$192,000.00 $191,840.96 $191,680.76 $191,519.39 $191,356.85 $191,193.12 $191,028.19 $190,862.07 $190,694.73 $190,526.17 $190,356.39 $190,185.36 $190,013.09 $189,839.56 $189,664.77 $189,488.70 $189,311.35 $189,132.71 $188,952.76 $188,771.50 $188,588.92 $188,405.01 $188,219.75 $188,033.15 $187,845.18 $187,655.85 $187,465.13

Owner's Equity

$48,000.00 $48,159.04 $48,319.24 $48,480.61 $48,643.15 $48,806.88 $48,971.81 $49,137.93 $49,305.27 $49,473.83 $49,643.61 $49,814.64 $49,986.91 $50,160.44 $50,335.23 $50,511.30 $50,688.65 $50,867.29 $51,047.24 $51,228.50 $51,411.08 $51,594.99 $51,780.25 $51,966.85 $52,154.82 $52,344.15 $52,534.87

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Consumer math Worksheet

Mortgage payment & GDSR calculations Solutions

27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60

Total in 5 years

$1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $1,559.04 $93,542.40 Mortgage payment

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$1,366.93 $1,365.53 $1,364.12 $1,362.70 $1,361.27 $1,359.83 $1,358.37 $1,356.91 $1,355.44 $1,353.95 $1,352.46 $1,350.95 $1,349.43 $1,347.90 $1,346.37 $1,344.81 $1,343.25 $1,341.68 $1,340.09 $1,338.50 $1,336.89 $1,335.27 $1,333.64 $1,331.99 $1,330.34 $1,328.67 $1,326.99 $1,325.30 $1,323.60 $1,321.88 $1,320.15 $1,318.41 $1,316.65 $1,314.89 $81,625.33 Interest payment

$192.11 $193.51 $194.92 $196.34 $197.77 $199.21 $200.67 $202.13 $203.60 $205.09 $206.58 $208.09 $209.61 $211.14 $212.67 $214.23 $215.79 $217.36 $218.95 $220.54 $222.15 $223.77 $225.40 $227.05 $228.70 $230.37 $232.05 $233.74 $235.44 $237.16 $238.89 $240.63 $242.39 $244.15 $11,917.07 Principal payment

$187,273.02 $187,079.52 $186,884.60 $186,688.26 $186,490.49 $186,291.27 $186,090.61 $185,888.48 $185,684.87 $185,479.79 $185,273.20 $185,065.11 $184,855.51 $184,644.37 $184,431.70 $184,217.47 $184,001.68 $183,784.32 $183,565.38 $183,344.83 $183,122.68 $182,898.91 $182,673.51 $182,446.47 $182,217.76 $181,987.40 $181,755.35 $181,521.61 $181,286.16 $181,049.00 $180,810.11 $180,569.48 $180,327.09 $180,082.93

$52,726.98 $52,920.48 $53,115.40 $53,311.74 $53,509.51 $53,708.73 $53,909.39 $54,111.52 $54,315.13 $54,520.21 $54,726.80 $54,934.89 $55,144.49 $55,355.63 $55,568.30 $55,782.53 $55,998.32 $56,215.68 $56,434.62 $56,655.17 $56,877.32 $57,101.09 $57,326.49 $57,553.53 $57,782.24 $58,012.60 $58,244.65 $58,478.39 $58,713.84 $58,951.00 $59,189.89 $59,430.52 $59,672.91 $59,917.07

Unpaid Balance

Owner's Equity

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