First Home Finance Question?

Problem 4: BUYING YOUR FIRST HOME

There is this 4 bedroom house you like, currently valued at $510,000. You and your spouse can make 20% down payment and amortize the remaining for the next 25 years. You can both make bi-weekly mortgage payments of $1,200 at the beginning of every two weeks. Your local bank has quoted you a mortgage rate of 6.1% APR with a 5-year term. You wish to select fixed interest rate plan for now.

a) Draw a detailed timeline and label all components.

b) Will you and your spouse be able to cover the mortgage with $1,200 bi-weekly payments? If not, what percentage or dollar amount of the current home value should you put in as your down payment to satisfy your mortgage payments?

c) If you wish to put in the 20% down payment, what should be the new bi-weekly mortgage payments you should pay at the beginning of every two weeks?

You and your spouse decided to purchase the house with a 20% down payment after all. Fifteen years later, you and your spouse realize that you want to accelerate this mortgage and finish paying the remaining principles within the next 5 years. You can do that by either 1 of the 2 methods. Your objective is to complete the mortgage payments within the next 5 years.

(A) 10% Annual Payments 鈥?Your bank will allow you to make a maximum of 10% of the full value (the amount before down payment) of the home each year. This can only be one lump sum payment within the year. For example, if your home value is $100,000 then you can only contribute a maximum payment of $10,000 (10% of $100,000) per year.

(B) Double-Up Payments 鈥?Your bank will allow you to schedule double-up mortgage payments. This means you can pre-authorize the bank to take extra payments up to the maximum amount of the bi-weekly payment. For example, if your bi-weekly payment is $1,000, you can instruct the bank to withdraw an additional $1,000 maximum for that payment and put a total of $2,000 as a payment.

d) Calculate the minimum annual amount required under method A to complete the mortgage within the next 5 years. You want to make these payments for the next 5 years and not make one large payment to cover the remaining balance. You will still make the regular weekly mortgage payments.

c) Calculate the total interest you are paying on this mortgage using the table.

e) Calculate the minimum double-up payments required in addition to the regular mortgage payments every two-week under method B to complete the mortgage within the next 5 years. Assume you have instructed the bank to double-up the payments until instructed otherwise. Remember, that each double-up payment cannot exceed the regular bi-weekly payments.

First Home Finance Question?fast loan

woah woah woah woah woah!!!!!!!!!

There is this 4 bedroom house you like, currently valued at $510,000. You and your spouse can make 20% down payment (OK GOOD HERE)!!!!! 510k souds pricey though

and amortize the remaining for the next 25 years NOT NO BUT HELL NO!!!!!!!

You can both make bi-weekly mortgage payments of $1,200 at the beginning of every two weeks. AGAIN WRONG MOVE. There is no need to make bi-weekly payments all of that extra money you are wasting it on your mortgage should be better used for savings/investments/emergencies.

Your local bank has quoted you a mortgage rate of 6.1% APR with a 5-year term. You wish to select fixed interest rate plan for now. This SCREAMS ARM!!!!!! 6.1% is a good rate BUT after that fifth year your interest rate JACKS UP AND YOU WILL PAY EXTRA CHARGES FOR THE REMANING BALANCE AND INTEREST.

Stay the hell away from this crap!!!! This is why there is a housing market/credit crunch going on right now. Sure five years looks good...THEN WHAT????? YOU GET SLAMMED THATS WHAT!!!!!

DEMAND 30 year fixed PERIOD!