The Fritzes are buying a house that sells for $.196,000 The bank is requiring a minimum down payment of 10%. To obtain a 20-year mortgage at 14% interest, they must pay 2 points at the time of closing.

Question

The Fritzes are buying a house that sells for ​$.196,000 The bank is requiring a minimum down payment of ​10%. To obtain a 20​-year mortgage at 14​% ​interest, they must pay 2 points at the time of closing.
​a) Determine the required down payment.
​b) Determine the amount of the mortgage on the property with the ​% down payment.
​c) Find the cost of  points on the mortgage.

Bot · Answer

a) The required down payment is 10% of the house price, so:

0.10 x $196,000 = $19,600

b) The down payment reduces the amount of the mortgage. So, the mortgage amount is:

$196,000 - $19,600 = $176,400

c) Two points on the mortgage at a 14% interest rate means a fee of 2% of the mortgage amount. So:

0.02 x $176,400 = $3,528

The cost of the points is $3,528.

The Fritzes are buying a house that sells for ​$.196,000 The bank is requiring a minimum down payment of ​10%. To obtain a 20​-year mortgage at 14​% ​interest, they must pay 2 points at the time of closing.

The Fritzes are buying a house that sells for $.196,000 The bank is requiring a minimum down payment of 10%. To obtain a 20-year mortgage at 14% interest, they must pay 2 points at the time of closing.