Sharon Fox decided to buy a home in Marblehead, Massachusetts, for $283,000. Her

Question

Sharon Fox decided to buy a home in Marblehead, Massachusetts, for $283,000. Her bank requires a 25% down payment. Sue Willis, an attorney, has notified Sharon that besides the 25% down payment there will be the following additional costs:

In addition, there will be a transfer tax of 1.5% of the purchase price and a loan origination fee of 3% of the mortgage amount. Assume a 30-year mortgage at a rate of 9.5%.

What is the initial amount of cash Sharon will need? (Do not round intermediate calculations. Round your answer to the nearest cent.)

What is her monthly payment? (Do not round intermediate calculations.Round your answer to the nearest cent.)

What is the total cost of interest over the life of the mortgage?(Use 360 days a year. Do not round intermediate calculations. Round your answer to the nearest cent.)

Sharon Fox decided to buy a home in Marblehead, Massachusetts, for $283,000. Her bank requires a 25% down payment. Sue Willis, an attorney, has notified Sharon that besides the 25% down payment there will be the following additional costs:

Explanation / Answer

a> Down Payment=0.25*283000 70750 Mortgage Amount=(283000-70750) 212250 Recording of Deed,Credit Appraisal and Preparation of document=(38+163+56) 257 Transfer Tax=0.015*283000 4245 Origination Fee=0.03*212250 6367.5 Total Amount of cash Sharon needs 223119.5 b>Interest factor for Interest=9.5 and Years=30, F=(1.000264)^360 1.100 So,PV of an annuity =P=A*(F-1)/(F*i) , where A=Monthly Repayment,I=Interest Rate per month or 223119.5=A*(1.1-1)/(1.1*0.000264) or A=Monthly Repayment Amount 647.939 c> Total amount paid=647.939*360 233258.04 Cost of interest=233258.04-223119.5 10138.54

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