Question 1
Bank that Sue should borrow from.
Based on both bank A & B annual percentage rates of 9% and 11% respectively, Sue should, thus, borrow the $ 8,000 loan she requires from bank A. This is because, borrowing from bank A will save her $ 7.51 for her monthly payments rather than when borrowing from bank B. Additionally, borrowing from bank A will save her $ 270.43 in terms of her total loan financial interest for the 36 months loan period rather than when borrowing from bank B.
Question 2
Benefits and drawbacks associated with online car buying
As a result of online car buying, Mackenzie benefited in that she was able to research on more than one vehicle variety, thus, allowing her to do proper comparison on various car models. Also, through online platform she was able to compare the prices of various car models. However, the drawbacks of online car purchase platform are that Mackenzie was not in a position to examine the conditions of the car personally before making the final decision to purchase the car.
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Question 3
7. HOUSING DECISON
Benefits to Bowmans for buying a home that needed improvements
The benefits to Bowman is that the house that needed improvements may have been the only housing unit they could afford and they were willing to renovate the house. Another benefit is that the house to be improved may have been situated exactly where they were willing to purchase their dream home.
3. ( LO7.1)
2/100*$ 1,800 = $ 36
4. (LO7.2)
$ 235*12*10 = $ 28,200
5. (LO7.2)
Total monthly housing payment
= monthly mortgage payment + monthly property taxes + monthly property insurance+ monthly association fees
[$5*$220] + [$1,800/12] + [$480/12] + [$220] = $ 1510
6. (LO7.3)
Affordable monthly mortgage payment, $751
Affordable mortgage amount, $125,167
Affordable home purchase, $147,255
7. ( LO7.3)
$8.71*$140 = $ 1,219.4
$5.37*$215 = $ 1,154.6
$7.45*$190 = $ 1,415.5
8. ( LO7.3)
Mortgage A payment = $985*30*12= $ 354,600
Mortgage B payment = ($780*5*12) +($1,056*25*12) = $363,600
Mortgage B will result in higher total payments than A
9. ( LO7.3)
At 4% = $4.1*120 = $ 492
At 5.5 % = $ 5.32*120 = $ 638.4
Monthly increased amount = $146.4
10. ( LO7.3)
Time to take to cover the cost of refinancing = $1,670/$56 = 29.82 months
11. ( LO7.3)
Amount James will have as down payment after 5 years of saving
5.416*$ 3,800 = $ 20.581
12. ( LO7.3)
Based on exhibit 8-8, the approximate total closing amount excluding the down payment in the event am buying a home would be $354,600
13. ( LO7.4)
Future value of the amount obtained from the sale of the house when invested for 5 years at 3%
FV = PV (1+i) n
PV = $3,450
I = 3%
N = 5 years
FV = 3,450 (1+0.03/12) 5*12
FV = $ 4, 007.58
Question 4
Beth Young Case
In this case, Beth young must have been aware of the current situation of her previous mortgage such as balance owned as well as the terms of the mortgage. Therefore, having such essential information and based on the kind of mortgage she had taken be it fixed rate, fixed-payment or the conventional mortgage, Beth Young could have obtained helpful information on her mortgage refinancing from various websites especially www.zillow.com/mortgage-calculator/refinance-calculator which could have helped her compare the details of her current mortgage with new terms related with the refinancing such as the new rates. Also, Beth Young could have been in contact with the mortgage officer to keep her updated on rates movements until such time when she deemed the rates favourable for her financing.
Question 5
The home owners may have used computer systems to search and gather information about various housing units available in various housing websites. From such websites, the home owners might have been able to understand the terms of the mortgage, compared various mortgage rates, and to some extent negotiated prices of various housing units online. The advice when buying house online is that the buyer should first check to ensure he/she is okay with the terms and conditions of the mortgage offered. Also, during price negotiation the buyer should personally meet the seller and avoid negotiating online and the buyer should get to see the house he/she is buying and verify that it actually exists to avoid being conned by various online scammers.
