Section 12.5 Real Estate Loans

TO DETERMINE MONTHLY PAYMENTS ON A HOME Payment = (loan amount ÷ 1000) x table value Use REAL ESTATE amortization table found on p. 528. Because this table lists the principal and interest per THOUSAND dollars borrowed, we have to divide the loan amount by $1000 before we multiply!

A couple plans to borrow $220,000 for 30 years to purchase a home A couple plans to borrow $220,000 for 30 years to purchase a home. Find both the payment and the total 30-year cost assuming (A) a 6.5% rate and (B) a 7.25% rate.

Prepare a payment schedule A payment schedule is also known as an amortization schedule. This schedule separates each payment into the portion going to interest and the portion going to the principal. (What goes to the principal is what reduces the debt!)

After making a 20% down payment, a couple purchases a home using a mortgage of $155,000 at 6¾% for 20 years. First find the monthly payment, then prepare a loan repayment schedule for the first 3 months.

Escrow Accounts AKA – impound accounts. Used to prevent losses from unpaid taxes or insurance. Homebuyer pays 1/12 of the total estimated tax and insurance each month. The lender holds this money until taxes and/or insurance is due and then pays that bill for the borrower.

A 20-year mortgage is taken out with a debt of $147,000 and a rate of 6½%. Taxes are estimated to be $2400 per year, and a homeowner’s insurance policy costs $647 per year. Find the total monthly payment.