Sharon Fox decided to buy a home in Marblehead, Massachusetts, for $284,000. Her
ID: 2767337 • Letter: S
Question
Sharon Fox decided to buy a home in Marblehead, Massachusetts, for $284,000. Her bank requires a 30% down payment. Sue Willis, an attorney, has notified Sharon that besides the 30% down payment there will be the following additional costs: Recording of the deed $39.00 A credit and appraisal report 164.00 Preparation of appropriate documents 57.00 In addition, there will be a transfer tax of 1.8% of the purchase price and a loan origination fee of 2.5% of the mortgage amount. Assume a 30-year mortgage at a rate of 10%. a)What is the initial amount of cash Sharon will need? B) What is her monthly payment? C) What is the total cost of interest over the life of the mortgage?
Explanation / Answer
Initial Amount = 30% of loan amount i .e $ 284000*30%=$ 85200
1.8% transfer tax 284000*1.8%=$ 5112
2.5% of origination fee (284000-85200) =198800*2.5% =$ 4970
cost of recording of deed = $ 39.00
cost of credit appraisal =$ 164.00
cost of appropriate documents =$ 57.00
Total =$ 95,442
Loan Monthly payments = E = p*r (1+r)^n/(1+r)^n -1 p= principle r= rate/12*100
when calculated on a financial calculator the EMI=$ 1745
and total interest cost =$ 429,260
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