Calculate Seyed\'s monthly PITI payment. To calculate principal and interest (PI

Question

Calculate Seyed's monthly PITI payment. To calculate principal and interest (PI) assume he has purchased a home for $140,000 and has a $112,000, 30-year, 4.735 percent fixed-rate mortgage. To calculate his local real estate taxes (T) use the real estate rate as given in the case, assuming the property has an assessed value of $128,000. Also include Seyed's projected homeowner's insurance (I) cost as given in the case. Assuming he has purchased a home for

$140,000 and has a $112,000, 30-year, 4.735 percent fixed-rate mortgage, the amount Seyed would pay in principal and interest each month is

$. (Round to the nearest cent.)

The amount Seyed would pay in taxes each month is

$(Round to the nearest cent.)

The amount Seyed would pay in insurance each month is

$(Round to the nearest cent.)

Seyed's projected monthly PITI payment would be

$(Round to the nearest cent.)

e. Determine if Seyed should buy or continue renting. To purchase the house considered in part (d), Seyed would pay $6,000 in closing costs including $2,800 in discount points. Consider a 1- and 7-year time horizon. (Hint:Use Worksheet for Rent-Versus-Buy decision.)

The total monthly rent costs for 1 year is

$(Round to the nearest dollar.)

The total renter's insurance for 1 year is

$(Round to the nearest dollar.)

The after-tax opportunity cost of interest lost because of having to maintain a security deposit for 1 year is

$(Round to the nearest dollar.)

The total cost of renting for 1 year is

$(Round to the nearest dollar.)

The total monthly rent costs for 7 years is

$(Round to the nearest dollar.)

The total renter's insurance for 7 years is

$(Round to the nearest dollar.)

The after-tax opportunity cost of interest lost because of having to maintain a security deposit for 7 years is

$(Round to the nearest dollar.)

The total cost of renting for 7 years is

$(Round to the nearest dollar.)

The total of the mortgage payments for 1 year is

$(Round to the nearest dollar.)

The total property taxes for 1 year is

$(Round to the nearest dollar.)

The total homeowner's insurance for 1 year is

$(Round to the nearest dollar.)

The total of the additional operating costs for 1 year is

$(Round to the nearest dollar.)

The after-tax opportunity cost of interest lost because of having to maintain a down payment for 1 year is

$(Round to the nearest dollar.)

The total closing costs, including points, is

$(Round to the nearest dollar.)

If the mortgage balance after 1 year is $110,267, the total of the mortgage payments going toward the loan principal for 1 year is

$.

(Round to the nearest dollar.)

The estimated appreciation in value of the home, less the sales commission at the end of the period is

$(Round to the nearest dollar.)

The total cost of buying a home, for those who do not itemize, after 1 year is

$(Round to the nearest dollar.)

The tax savings from the tax-deductibility of the interest portion of the mortgage payments for 1 year is

$(Round to the nearest dollar.)

The tax savings from the tax-deductibility of the property taxes on the new house for 1 year is

$(Round to the nearest dollar.)

The tax savings from the tax-deductibility of the points portion of the closing costs for 1 year is

$(Round to the nearest dollar.)

The total cost of buying a home, to homebuyers who itemize, after 1 year is

$(Round to the nearest dollar.)

The advantage of buying a house, to those who do not itemize, after 1 year is

$(Round to the nearest dollar.)

The advantage of buying a house, to those who do itemize, after 1 year is

$(Round to the nearest dollar.)

The total of the mortgage payments for 7 years is

$(Round to the nearest dollar.)

The total property taxes for 7 years is

$(Round to the nearest dollar.)

The total homeowner's insurance for 7 years is

$(Round to the nearest dollar.)

The total of the additional operating costs for 7 years is

$(Round to the nearest dollar.)

The after-tax opportunity cost of interest lost because of having to make a down payment for 7 years is

$(Round to the nearest dollar.)

The total closing costs, including points, is

$(Round to the nearest dollar.)

If the mortgage balance after 1 year is $97,960, the total of the mortgage payments going toward the loan principal for 7 years is

$(Round to the nearest dollar.)

The estimated appreciation in value of the home, less the sales commission at the end of the period is

$(Round to the nearest dollar.)

The total cost of buying a home, for those who do not itemize, after 7 years is

$(Round to the nearest dollar.)

The tax savings from the tax-deductibility of the interest portion of the mortgage payments for 7 years is

$(Round to the nearest dollar.)

The tax savings from the tax-deductibility of the property taxes on the new house for 7 years is

$(Round to the nearest dollar.)

The tax savings from the tax-deductibility of the points portion of the closing costs for 7 years is

$(Round to the nearest dollar.)

The total cost of buying a home, to homebuyers who itemize, after 7 years is

$(Round to the nearest dollar.)

The advantage of buying a house, to those who do not itemize, after 7 years is

$(Round to the nearest dollar.)

The advantage of buying a house, to those who do itemize, after 7 years is

$(Round to the nearest dollar.)

Explanation / Answer

$140,000 and has a $112,000, 30-year, 4.735 percent fixed-rate mortgage, the amount Seyed would pay in principal and interest each month is

$. (Round to the nearest cent.)

PI = [P x R x (1+R)^N]/[(1+R)^N-1],

where P is principal amount ,

R is the interest rate per month = 4.735/12 = 0.395%

and N is the number of monthly installments = 30*12 = 360

now PI= [112,000* 0.395% * (1+0.395%)^360] / [(1+0.395%)^360-1= $441

The amount Seyed would pay in taxes each month is

$(Round to the nearest cent.)

T=128,000/100*.91=1164.8 annual

Monthly payment = 1164.8/12 = $97

The amount Seyed would pay in insurance each month is

$(Round to the nearest cent.)

I=275 annual

Monthly payment = 275/12 = $23

Seyed's projected monthly PITI payment would be

$(Round to the nearest cent.)

Monthly PITI payment including principal, interest, taxes and insurance of property.
= $441+ $ 97 + $ 23 = $561

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