Loan Project

In: Business and Management

Submitted By prettyjugalette
Words 984
Pages 4
Loan project: Buying a House in Virginia Beach, VA

Task 1: House Description

I decided to choose a house in close vacinity of where I currently reside because my family is in the process of looking for a home. Currently, we live in military housing, and this is an excellent chance to view different homes, areas, schools, and costs that are associated with the buying a home. The informative process will prove to be benefical on both a professional and personal level.

Asking Price: $430,000

Real Estate Taxes: $3,277.32 (found at: Virginia Beach, VA real estate assessor database)

Purchase Price: $352,400 (The 2013/2014 Assessed Property Value)

Current market Interest Rate (30 Yr. Fixed Rate): 4.047% through Absolute Mortgage Company on by zipcode 23464

Task 2:
20% Down Payment: $352,400(.20) = $70,480
Amount Financed: $352,400-$70,480=$ 281,920
Monthly Mortgage Payment: $1358.58

Payment Calculation: * Present value PV = $281,920 * Annual interest rate r = 0.04047 * Interest compounded m = 12 times per year * Number of payments n = 30 years X 12 months per year= 360 * Interest rate per month i=r/m = 0.04047/12

The monthly mortgage payment PMT is:

PMT=PV * i/1-(1+i)^-n
= $281,920 * 0.0033725/1-(1+0.0033725)^-360
= $281,920(0.0048012887)
= $1353.58

Remark: For accuracy of the payment amount, rounding of two decimal points was not completed until the last step.

Task 3:
Monthly real estate taxes: $273.11 ($3,277.32 /12)

Total monthly payment = $1626.69 ($1353.58 monthly mortgage payment + $273.11 monthly taxes)

Task 4:
Minimum Income Requirement:

Total Monthly Payment ≤ 30% X Monthly Income
(Total Monthly payment)/0.30 ≤ Monthly Income

$1629.69/(0.30)= $5,432.30 [Monthly income ≥ (total monthly payment/0.30)]


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