Math Review – Test #2



Math Review – Test #2

1. You pay $11,200 in interest for the first year of your $160,000 mortgage loan. What interest rate are you paying?

2. If you can borrow 90% of the appraised value of a property, the interest rate is 8%, and the first month’s interest expense is $1,000, what is the appraised value of the property?

3. The mortgagee will be charging 1 (one) point on a loan. The sale price is $250,000 and the LTV is 80%. How much will the mortgagor pay, in points, at closing?

4. On a home improvement loan you borrow $15,000 on a straight loan with a 10% Note Rate. If you pay off the loan at the end of the first year, what will the final payment be if you pay the interest on an annual basis?

5. A buyer is purchasing a home for $95,000 with an 80% LTV 1st mortgage loan. It will have a loan origination fee of 1 point and 3 discount points. The closing fee is $235, recording fees are $55 and the lenders title insurance policy is $140. The buyers have deposited $2,000 in earnest money with the listing firm. How much money will the buyer need to bring to the closing?

6. Sally buys a home for $275,000 with 90% LTV first at 6.5% annual interest, payable in equal monthly installments of $1,564.37. What is the principal balance of the loan after the first payment?

7. What is the annual real estate tax on a property appraisal at $150,000 which is assessed at $195,000 with an equalization factor of 120 percent if the tax rate is 38 mills.

8. Kelli has been granted a loan of $340,500. How much will Kelli’s monthly principal and interest payments be, using a loan payment factor of $7.16 per $1,000 of loan amount?

Answer Question #1:

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Answer Question #2:

Step 1 Step 2

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Annual Interest ÷ Annual Rate = Loan Amount Loan Amount ÷ LTV = Value/Price

$12,000 ÷ .08 = $150,000 $150,000 ÷ .90 = $166,667

Answer Question #3:

$200,000 x .01 = $2,000 (one of the wrong answers will be $2,500)

$250.00 Sale Price

X .80 LTV

$200,000 Loan Amount

Answer Question #4:

Annual interest : Pay off end of year 1:

$15,000 Interest $1,500

x .10 Principal Balance +$15,000

= $1,500 Payoff $16,500

Answer Question #5:

$95,000

X .20

$19,000 down payment

$95,000 Sales Price $19,000 down payment

x.80 LTV_ $ 3,040 points

76,000 Loan Amt. $430 closing costs

x.04 points $22,470 sub total

$3,040 - $2,000 earnest money

= $20,470 cash to close

Answer Question #6:

Sales Price $275,000

LTV X .90

loan amount $247,500

MONTH #1 MONTH #2 - shown just to illustrate further amortization

beginning loan bal. $247,500 $247, 276.26

x note rate X .065 X .065

= annual interest $16,087.50 $16,072.96

annual interest $16,087.50 $16,072.96

divided by 12 ÷ 12 ÷ 12

= month interest $1,340.63 $1,339.41

constant mo. payment (P&I) $1,564.37 $1,564.37

less mo. interest -$1,340.63 - $1,339.41

$ for principal reduction $223.74 $224.96

beginning loan balance $247,500.00 $247,276.26

less principal reduction -$223.74 - $224.96

= new loan balance $247,276.26 * 247,051.30

* $247,276.26 is the answer to question #6, ….month #2 is shown just to illustrate how the amortization process would progress each month as the loan balance continues to decline (amortize).

Answer Question #7 Answer Question #8:

Assessed Value $195,000 $340,500 Loan Amount

x Equalization Factor x 1.20 ÷ $1,000 ÷ Size of each mortgage factor unit

= equalized value $234,000 = 340.5 = Number of $1,000 units in a $340,500 loan

x tax rate .038 340.5 Number of units

= annual tax $8,892 x $7.16 x cost per unit/ aka mortgage factor

=$2,437.98 = Monthly P&I for a $340,500 loan when the mortgage factor is $7.16/$1,000

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$11,200 (part)

÷ ÷

(whole) $160,000 X =________ (rate)

Answer: 7% (.07) Rate

$1,000 monthly interest

x 12

= $12,000 annual interest (part)

÷ ÷

Loan amt. X 8% (rate)

= $150,000 (.08)

Loan amt. $150,000 (part)

÷ ÷

= $166,667 X 90% LTV (rate)

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