can someone please check my work on mortgage?

- anonymous

can someone please check my work on mortgage?

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- katieb

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- anonymous

Okay.

- anonymous

Link??

- anonymous

##### 1 Attachment

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## More answers

- anonymous

@jim_thompson5910

- anonymous

@karatechopper
@mathmate
@misssunshinexxoxo

- jim_thompson5910

first two look good so far

- jim_thompson5910

question 3 is incorrect

- anonymous

how would i solve that one

- jim_thompson5910

what is 1.5% of that mortgage?

- anonymous

multiply?

- jim_thompson5910

yeah 0.015 with the mortgage amount

- jim_thompson5910

1.5% =0.015

- anonymous

of what?

- jim_thompson5910

the $197,000 mortgage

- anonymous

which is 295000

- anonymous

2955

- jim_thompson5910

add that onto 2000

- jim_thompson5910

since it says "A mortgage broker charges $2000 plus 1.5% of the mortgage amount"

- anonymous

4955

- anonymous

right @jim_thompson5910

- jim_thompson5910

yes

- anonymous

anything else that was wrong @jim_thompson5910

- jim_thompson5910

there are some here you didn't answer

- anonymous

which ones

- jim_thompson5910

like "A mortgage is in the amount of $600,000. The origination fee is 0.5%, the intangible tax is 0.2%, and there are 1.5 discount points"

- jim_thompson5910

and "Sherri attempts to determine the total cost of a $500,000 ARM which starts at 6% by predicting the monthly payments. Her predictions are shown in the table"

- anonymous

is that it or is there more

- jim_thompson5910

there are more
basically where you didn't highlight the answer in yellow

- jim_thompson5910

I'll be right back

- anonymous

yeah that is my answer the ones i highlighted @jim_thompson5910

- anonymous

are you still checking it @jim_thompson5910

- anonymous

yes no maybe? @jim_thompson5910

- jim_thompson5910

yes I'm still checking

- jim_thompson5910

the one with "What is the amount of the balloon payment rounded to the nearest dollar?" is incorrect
where you picked $192,063

- anonymous

ok how can i fix that

- jim_thompson5910

go here
http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx

- jim_thompson5910

type in the given mortgage amount (200,000)
interest rate (7%)
time (15 years)
then scroll to June 2019

- jim_thompson5910

look in the last column

- anonymous

165,163.53?

- jim_thompson5910

which rounds to 165,164

- anonymous

anything else that is wrong?

- anonymous

@jim_thompson5910

- jim_thompson5910

"Julie is buying a house for $225,000. She obtains a mortgage in the amount of $156,000 at a 4.5% fixed rate. The bank offers a 4.25% interest rate if Julie pays 2.25 points. What is the cost of points for this mortgage rounded to the nearest dollar?"
that one is wrong as well

- jim_thompson5910

take 1% of the mortgage, then multiply by 2.25

- anonymous

1% of 156,000

- jim_thompson5910

yeah

- anonymous

3510

- anonymous

any more?

- anonymous

what about the hank and caesar one?

- jim_thompson5910

I'm looking at the ones you answered. I'm onto the last one

- anonymous

i answered both hank and caesar?

- anonymous

?????

- jim_thompson5910

you didn't mark the answer

- jim_thompson5910

some of the questions weren't marked

- anonymous

can you tell me the ones i didn't mark @jim_thompson5910

- jim_thompson5910

the question "What is the break-even point for the loans?" has the correct answer that you marked (10 years)

- jim_thompson5910

the other stuff is unmarked, so I'll let you do that part.

- anonymous

which questions tell me the beginning of the question

- jim_thompson5910

it's in the doc file. There are a lot that weren't marked

- anonymous

what do you mean without the highlighter?

- jim_thompson5910

yeah

- jim_thompson5910

there are no yellow highlights

- anonymous

let me highlight them then

- anonymous

##### 1 Attachment

- anonymous

i fixed it @jim_thompson5910

- jim_thompson5910

ok let me check

- jim_thompson5910

this one is incorrect
`A mortgage is in the amount of $600,000. The origination fee is 0.5%, the intangible tax is 0.2%, and there are 1.5 discount points.Â `
`Which of the following is the total cost of the origination fee, the intangible tax, and the discount points?`

- anonymous

ok how can i fix it

- jim_thompson5910

take 0.5% of the mortgage to get x
take 0.2% of the mortgage to get y
take 1% of the mortgage, multiply it by 1.5 to get z
add
x+y+z

- anonymous

i got 10200

- anonymous

wait wait

- anonymous

its 13200

- anonymous

right?

- jim_thompson5910

yep

- jim_thompson5910

`Sherri attempts to determine the total cost of a $500,000 ARM which starts at 6% by predicting the monthly payments. Her predictions are shown in the table.Â `
is incorrect

- jim_thompson5910

I'm not sure how you got that

- anonymous

how would i fix it

- jim_thompson5910

$2997.75 per month for 5 years
$2858.27 per month for 15 years
$3093.85 per month for 10 years
add up all that

- anonymous

multiply each one right?

- jim_thompson5910

yeah and keep in mind 12 months = 1 year

- anonymous

so multiply the years by 12?

- anonymous

and then add the price

- anonymous

@jim_thompson5910

- jim_thompson5910

yes to convert to months

- anonymous

so then for example i multiply 60 * 2997.75 or add the two

- jim_thompson5910

yeah do that for the three lines, then add the results

- anonymous

so i multiply them

- jim_thompson5910

then add, yes

- anonymous

i got it. anything else that is wrong?

- jim_thompson5910

what answer did you get

- anonymous

1065615.6

- jim_thompson5910

good

- jim_thompson5910

`Jackie obtains a 30-year 4/2 ARM at 5% with a 4/7 cap structure in the amount of $313,500. What is the monthly payment during the initial period?`
is wrong

- jim_thompson5910

Use the formula
\[\Large M = \frac{L*i}{1-(1+i)^{-n}}\]
L = 313,500
i = 0.05/12 = 0.00416666666667
n = 30*12 = 360

- anonymous

-n?

- jim_thompson5910

yeah the exponent is -n

- anonymous

i got 1682.94

- anonymous

right @jim_thompson5910

- jim_thompson5910

i got the same

- anonymous

anything else thats wrong?

- anonymous

@jim_thompson5910

- jim_thompson5910

still checking

- jim_thompson5910

why did you pick $192,063 again? we already went over that one

- jim_thompson5910

the one with the balloon mortgage

- anonymous

yeah we did

- jim_thompson5910

so be sure to fix that as well

- jim_thompson5910

`Mabel has a 15 year adjustable rate mortgage with a fixed rate for the first 4 years. In the 5thÂ year, the interest rate rises to 5.8%. The remaining balance at the end of the 4thÂ years is $231,975.40. What is the monthly payment in the 5thÂ year?`
Use
\[\Large M = \frac{L*i}{1-(1+i)^{-n}}\]
L = 231,975.40
i = 0.058/12 = 0.004833
n = 11*12 = 132

- anonymous

is it 2381.2632443602311616

- jim_thompson5910

more like 2381.310317

- jim_thompson5910

but close enough

- anonymous

what about the question with hank and caesar

- jim_thompson5910

the one with hank, where you picked 570,702, is correct

- anonymous

ceasar?

- anonymous

caesar?

- anonymous

that one i know is wrong

- jim_thompson5910

not sure yet

- jim_thompson5910

they pulled a mean trick on that one

- jim_thompson5910

instead of 0.5% the origination fee is 1%

- anonymous

so what do i do

- jim_thompson5910

but you got the right answer (by randomly guessing? lol)
1.75*0.01*110500+2.0*0.01*110500 = 4,143.75

- anonymous

lol yay

- anonymous

check bradley

- anonymous

and the last three of the questions

- jim_thompson5910

the Bradley one is correct

- anonymous

the mortgage one?

- anonymous

???

- jim_thompson5910

see attached

##### 1 Attachment

- anonymous

i will solve it check the next 2

- anonymous

i got 3,455.20

- anonymous

what about the last 2

- anonymous

@jim_thompson5910

- jim_thompson5910

3,455.20 is correct for that one

- jim_thompson5910

did you guess on the last 2 as well?

- jim_thompson5910

they are correct

- anonymous

thank you @jim_thompson5910

- anonymous

can you answer one last question for me?

- anonymous

Why it is necessary to prorate expenses? Explain in complete sentences. @jim_thompson5910

- jim_thompson5910

tell me what you think

- anonymous

i am not sure @jim_thompson5910

- jim_thompson5910

what does prorate mean? any idea?

- anonymous

to disribute money evenly

- jim_thompson5910

so what do they mean when they say "prorate expenses" ?

- jim_thompson5910

you're on the right track

- anonymous

to distibute such expenses evenly

- jim_thompson5910

so why is it necessary to do that?

- anonymous

so that the expenses are not being recieved unevenly which could cause discrepsy and issues in a possible bank account

- anonymous

???

- jim_thompson5910

Let's say that it costs $100 in property tax for a certain month (say June)
If person A is selling the house to person B, and the house is fully sold on June 10th, is it fair for person A to pay all of the $100 tax for the full month of June?

- anonymous

no bc he he already sold the property

- jim_thompson5910

so it's more fair to have person A pay 10/30 = 1/3 of the $100 tax bill
and have person B pay 20/30 = 2/3 of the bill

- jim_thompson5910

that's one example of prorating expenses

- anonymous

so what does this imply like by definition

- jim_thompson5910

mortgage insurance is another item that's prorated

- jim_thompson5910

like you said: to split up the costs fairly

- jim_thompson5910

and the split is based on how long the person has possession of the property

- anonymous

oh ok

- jim_thompson5910

the split would be 50/50 if person A had the property for the first 15 days, and person B had it for the rest of the 15 days

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