Ch15 Complete Test Bank The Cost of Home Ownership

Practical Business Math Procedures, 13e (Slater)

Chapter 15 The Cost of Home Ownership

1) Subprime loans are very safe.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

2) The amount of the down payment one makes on a home directly affects the size of the monthly payment.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

3) Interest rates on mortgages do not vary from bank to bank.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

4) A variable rate mortgage is always fixed.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

5) Graduated payments let the borrower pay more at the beginning of the mortgage and make lower payments later.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

6) A point is 1% of the amount of the loan.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

7) Points are to be paid off as part of the regular monthly payment.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

8) The total of all monthly payments plus the amount of the mortgage equals the total cost of interest.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

9) Interest is equal to principal times rate divided by time.

Difficulty: 1 Easy

Topic: LU 15-02 Amortization Schedule-Breaking Down the Monthly Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

10) The reduction of principal each month is equal to the payment minus the interest.

Difficulty: 1 Easy

Topic: LU 15-02 Amortization Schedule-Breaking Down the Monthly Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

11) Banks cannot provide amortization schedules to borrowers.

Difficulty: 1 Easy

Topic: LU 15-02 Amortization Schedule-Breaking Down the Monthly Payment

Learning Objective: 15-02 (2) Prepare an amortization schedule.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

12) The major portion of the monthly payment is used to pay off the principal.

Difficulty: 1 Easy

Topic: LU 15-02 Amortization Schedule-Breaking Down the Monthly Payment

Learning Objective: 15-02 (2) Prepare an amortization schedule.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

13) A larger down payment is needed for a 15-year fixed-rate mortgage than for a 30-year fixed-rate mortgage.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

14) A mortgage of $80,000 with 2 points means the borrower would have to pay at closing $800.

Difficulty: 2 Medium

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

15) All mortgages must be paid monthly.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

16) A biweekly mortgage results in six extra payments per year.

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

17) From the table in the handbook, the monthly payment on a home purchased for $120,000 with 20% down at 8% for 25 years is $741.12.

Difficulty: 2 Medium

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

18) From the table in the handbook, the monthly payment on a home purchased for $150,000 with 30% down at 13% for 30 years is $1,132.53.

Difficulty: 2 Medium

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

19) A monthly payment of $850 on a 30-year $80,000 mortgage results in a total cost of interest of $226,000.

Difficulty: 2 Medium

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

20) Using the table in the handbook, the total cost of interest on a home purchased for $200,000 with 30% down at 7% for 35 years is $235,732.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.; 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

21) Bill's monthly payment is $1,056 per month. The principal is $100,000 at a rate of 12½% for 35 years. The amount of interest for Bill's first payment is $1,011.67.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

22) Abby's monthly payment is $781.60 per month. The principal is $80,000 at a rate of 11½% for 35 years. The principal reduction after the first mortgage payment is $14.93.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

A) The interest rate is not fixed

B) The interest rate is fixed for five years

C) The rate is not subject to change

D) Larger monthly payments than a fixed rate

E) None of these

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

24) Graduated payments result in the borrower paying:

A) More at the beginning of the mortgage

B) Less at the beginning of the mortgage

C) Less at the end of the mortgage

D) The mortgage at 1/2 the standard rate

E) None of these

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

25) Points represent:

A) 2% of the amount of the loan

B) Monthly payments

C) An additional cost of receiving the mortgage

D) 3% up-front payment

E) None of these

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

26) Megan Mei is charged 2 points on a $120,000 loan at the time of closing. The original price of the home before the down payment was $140,000. The points in dollars cost Megan:

A) $2,400

B) $2,800

C) $4,200

D) $8,200

E) None of these

Difficulty: 2 Medium

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

27) All mortgage payments must be paid:

A) Weekly

B) Monthly

C) Biweekly

D) Semiannually

E) None of these

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (1) List the types of mortgages available.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

28) Ben Brown bought a home for $225,000. He put down 20%. The mortgage is at 6 1/2% for 30 years. Using the table in the handbook, his monthly payment is:

A) $1,319.04

B) $1,319.40

C) $1,216.80

D) $1,139.40

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

29) Chin Woo bought a home for $160,000. He put down 20%. The mortgage is at 8 1/2% for 25 years. Using the table in the handbook, his yearly payments are:

A) $1,238.00

B) $12,380.16

C) $12,830.61

D) $12,380.61

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.; 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

30) The total cost of interest is equal to the total of all monthly payments:

A) Divided by amount of mortgage

B) Minus amount of mortgage

C) Plus amount of mortgage

D) Times amount of mortgage

E) None of these

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

31) The difference between the monthly payments on a $120,000 home at 6 1/2% and at 8% for 25 years is (use the table in the handbook):

A) $81.12

B) $151.02

C) $115.20

D) $91.12

E) None of these

Difficulty: 2 Medium

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

32) Stu Reese has a $150,000 7 1/2% mortgage. His monthly payment is $1,010.10. His first payment will reduce the principal to an outstanding balance of:

A) $149,729.40

B) $149,927.40

C) $72.60

D) $149,910.40

E) None of these

Difficulty: 3 Hard

Topic: LU 15-02 Amortization Schedule-Breaking Down the Monthly Payment

Learning Objective: 15-02 (2) Prepare an amortization schedule.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

33) An amortization schedule shows:

A) Balance of interest outstanding

B) The increase to principal

C) Increase in loan outstanding

D) Portion of payment broken down to interest and principal

E) None of these

Difficulty: 1 Easy

Topic: LU 15-02 Amortization Schedule-Breaking Down the Monthly Payment

Learning Objective: 15-02 (2) Prepare an amortization schedule.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

34) Craig Hammer purchased a new condominium for $225,000. The bank required a $30,000 down payment. Assuming a rate of 8% on a 25-year mortgage, Craig's monthly payment is (use the table in the handbook):

A) $1,431.30

B) $1,413.30

C) $1,505.40

D) $1,505.04

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

35) Abe Aster bought a new split level for $200,000. Abe put down 30%. Assuming a rate of 11 1/2% on a 30-year mortgage, Abe's monthly payment is (use the table in the handbook):

A) $1,423.80

B) $1,387.40

C) $1,367.80

D) $1,982.00

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

36) Dick Hercher bought a home in Homewood, Illinois, for $230,000. He put down 20% and obtained a mortgage for 25 years at 8%. The total interest cost of the loan is:

A) $184,000.00

B) $327,372.80

C) $242,411.00

D) $242,144.00

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

37) Bill Moore took out an $80,000 mortgage on a ski chalet. The bank charged 4 points at closing. The points in dollars cost Bill:

A) $800

B) $3,200

C) $2,400

D) $1,600

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

38) Joe Jay purchased a new colonial home for $260,000, putting down 20%. He decided to use Loyal Bank for his mortgage. They were offering a 6 1/2% for a 25-year mortgage. The principal after the first payment had a balance outstanding of:

A) $207,270.95

B) $207,720.59

C) $207,720.95

D) $207,270.59

E) None of these

Difficulty: 3 Hard

Topic: LU 15-02 Amortization Schedule-Breaking Down the Monthly Payment

Learning Objective: 15-02 (2) Prepare an amortization schedule.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

39) Jill Diamond bought a home for $190,000 with a down payment of $65,000. The rate of interest was 7% for 35 years. Her monthly mortgage payment is:

A) $843.75

B) $834.57

C) $798.75

D) $978.57

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

40) Lizzy Clar bought a home for $160,000, putting down $30,000. The rate of interest is 7% for 25 years. The total yearly mortgage payment is:

A) $11,029.20

B) $11,920.20

C) $919.10

D) $18,782.40

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

41) Tom Burke buys a home in Virginia for $139,000. He puts down 30% and obtains a mortgage for 25 years at 12%. The portion of the first payment that covers interest is:

A) $52.54

B) $1,025.54

C) $973.00

D) $97.30

E) None of these

Difficulty: 3 Hard

Topic: LU 15-02 Amortization Schedule-Breaking Down the Monthly Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

42) Marsha Terban bought a home for $119,000 with a down payment of $19,000. Her rate of interest is 12 1/2% for 35 years. The balance of the mortgage at the end of the first month is:

A) $3.33

B) $98,944

C) $99,669.76

D) $99,985.67

E) None of these

Difficulty: 3 Hard

Topic: LU 15-02 Amortization Schedule-Breaking Down the Monthly Payment

Learning Objective: 15-02 (2) Prepare an amortization schedule.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

43) Beverly Frost bought a home for $190,000 with a down payment of $19,000 at 7% for 25 years. Since then the rate has risen to 9%. How much more would her monthly payment be if she bought the house at 9%?

A) $208.97

B) $436.40

C) $143.00

D) $227.43

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Analyze

Type: Static

Accessibility: Keyboard Navigation

44) A $104,000 selling price with $24,000 down at 8 1/2% for 25 years results in a monthly payment of:

A) $644.80

B) $645.60

C) $546.06

D) $654.60

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

45) Amanda Chin purchased a home for $296,000; she put 20% down with a mortgage rate of 6% for 30 years. What is Amanda's monthly payment?

A) $1,776

B) $1,402

C) $1,240.80

D) $1,420.80

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

46) Darlene Ramirez bought a home for $140,000. She put 20% down with a mortgage rate at 7.5% for 25 years. Her yearly payments are:

A) $1,776

B) $9,932.16

C) $12,415.20

D) $9,329.61

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

47) With a mortgage of $48,000 for 15 years with a rate of 11%, what are the total finance charges?

A) $50,236.80

B) $5,023.68

C) $545.76

D) $54,576

E) None of these

Difficulty: 2 Medium

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.; 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

48) A condo in Orange Beach, Alabama, is listed for $1.4 million with 20% down and financing at 5% for 30 years. What would the monthly payment be?

A) $7,518

B) $6,014.40

C) $6,041.20

D) $7,815.00

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

49) Jen purchased a condo in Naples, Florida, for $699,000. She put 20% down and financed the rest at 5% for 35 years. What amount did Jen owe in interest?

A) $457,425.60

B) $606,823.20

C) $626,863.20

D) $600,000.00

E) None of these

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

Match the following terms with their definitions.

A) Breakdown of principal and interest

B) One-time up-front payment

C) Mortgage payments rise in later years

D) Loan

E) Not fixed

F) Can prevent foreclosures

G) 26 payments per year

50) Short sale

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (1) List the types of mortgages available.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.; 15-02 (2) Prepare an amortization schedule.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

51) Amortization schedule

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (1) List the types of mortgages available.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.; 15-02 (2) Prepare an amortization schedule.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

52) Graduated payments

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (1) List the types of mortgages available.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.; 15-02 (2) Prepare an amortization schedule.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

53) Biweekly

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (1) List the types of mortgages available.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.; 15-02 (2) Prepare an amortization schedule.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

54) Points

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (1) List the types of mortgages available.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.; 15-02 (2) Prepare an amortization schedule.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

55) Mortgage

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (1) List the types of mortgages available.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.; 15-02 (2) Prepare an amortization schedule.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

56) Variable rate

Difficulty: 1 Easy

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (1) List the types of mortgages available.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.; 15-02 (2) Prepare an amortization schedule.

Bloom's: Remember

Type: Static

Accessibility: Keyboard Navigation

Answers: 50) F 51) A 52) C 53) G 54) B 55) D 56) E

57) With a selling price of $125,000, a down payment of $20,000, and a mortgage rate of 10% for 30 years, calculate:

A. Principal

B. Payments per $1,000

C. Monthly mortgage payment

D. The total cost of interest

A. $125,000 - $20,000 = $105,000; B. Table 15-1 factor for 10%, 30 years = $8.78; C. 105 × 8.78 = $921.90; D. $921.90 × 360 = $331,884; $331,884 - $105,000 = $226,884.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Analyze

Type: Static

Accessibility: Keyboard Navigation

58) With a selling price of $125,000, a down payment of $20,000, and a mortgage rate of 10% for 30 years, if the loan was for 25 years, what would be the difference in the total interest cost of the loan?

30 years: 105 × $8.78 (Table 15-1) = $921.90; $921.90 × 30 × 12 = $331,884;

25 years: 105 × $9.09 = $954.45; $954.45 x 25 x 12 = $286,335; $331,884 - $286,335 = $ 45,549.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Analyze

Type: Static

Accessibility: Keyboard Navigation

59) Lucy purchased a home. Her monthly payments are $1,534. Her annual real estate tax is $3,000 along with an annual insurance premium of $1,800. Lucy's bank requires that her monthly payments include an escrow deposit for the tax and insurance. What is the total payment each month for Lucy?

$1,534 + $3,000 / 12 + $1,800 / 12 = $1,534 + $250 + $150 = $1,934.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

60) With a mortgage of $88,000 at 11% for 25 years, by what amount is the principal reduced the first month?

$88,000 × .11 × 1/12 = $806.67; $88 × $9.81 (Table 15-1) = 863.28; $863.28 - $806.67 = $56.61.

Difficulty: 3 Hard

Topic: LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

61) Al Bank is worried about financing his new home. The house sells for $190,000. If he puts down 20%, what will Al's payment be at the following rates?

A. Monthly Payment and Total Cost of Loan given loan for 25 years at 10%

B. Monthly Payment and Total Cost of Loan given loan for 25 years at 10 ½%

C. Monthly Payment and Total Cost of Loan given loan for 25 years at 11%

D. Monthly Payment and Total Cost of Loan given loan for 25 years at 12%

A. $190,000 × .8 = $152,000; $152,000 / $1,000 = $152; $152 × 9.09 (Table 15-1) = $1,381.68; $1,381.68 × 25 × 12 = $414,504.00; $414,504.00 - $152,000 = $262,504.00;

B. $152 × 9.45 = $1,436.40; $1,436.40 × 12 × 25 = $430,920.00; $430,920.00 - $152,000 = $278,920.00;

C. $152 × 9.81 = $1,491.12; $1,491.12 × 25 × 12 = $447,336.00; $447,336.00 - $152,000 = $295,336;

D. $152 × 10.54 = $1,602.08; $1,602.08 × 25 × 12 = $480,624.00; $480,624.00 - $152,000 = $328,624.00

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Analyze

Type: Static

Accessibility: Keyboard Navigation

62) With a selling price $140,000, a 20% down payment, and interest at 10 ½% for 25 years, calculate:

A. Amount of mortgage

B. Monthly payment

C. Interest portion of first payment

D. Principal portion of first payment

B. $1,058.40;

C. $980;

D. $78.40

A. $140,000 × .8 = $112,000; B. $112,000 / $1,000 = 112; 112 × $9.45 (Table 15-1) = $1058.40; C. $112,000 × .105 × 1/12 = $980; D. $1,058.40 - $980 = $78.40.

Difficulty: 2 Medium

Topic: LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

63) A condo is advertised in The Wall Street Journal for $350,000. It states in the ad that a 20% down payment is required. The rate of interest is 11% on a 25-year mortgage. What would be (A) the monthly payment and (B) the total cost of interest?

B. $544,040

$350,000 × .8 = $280,000; $280,000 / $1,000 = 280; $280 × $9.81 (Table 15-1) = $2,746.80; $2,746.80 × (25 × 12) - $280,000 = $544,040.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

64) Jackie Revez purchased a new home in Riverside Park. The purchase price was $210,000, and she put down 30%. Her mortgage is 10 ½% for 30 years. What is the outstanding balance of her loan after the first month?

$210,000 × .7 = $147,000; $147,000 / $1,000 = 147; 147 × $9.15 (Table 15-1) = $1,345.05; $147,000 × .105 × 1/12 = $1,286.25; $1345.05 - $1,286.25 = $58.80; $147,000 - $58.80 = $146,941.20.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-02 (2) Prepare an amortization schedule.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

65) Angie Roy took out an $80,000 mortgage on a ski chalet in Vermont. The bank charged 3 points at closing. What did the points cost Angie at closing?

$80,000 × .03 = $2,400.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

66) Nancy Karnes bought a home for $143,000 with a down payment of $15,000. Her rate of interest is 9% for 35 years. Calculate her:

A. Monthly payment

B. First payment broken down into interest and principal

C. Balance of mortgage at end of month

B. $960 interest and $43.52 principal;

C. $127,956.48

A. $128 × $7.84 (Table 15-1) = $1,003.52;

B. $128,000 × .09 × 1/12 = $960 interest, $1,003.52 - $960 = $43.52 principal.

C. $128,000.00 - $43.52 = $127,956.48.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-02 (2) Prepare an amortization schedule.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

67) John Lee bought a home in Des Moines, Iowa, for $135,000. He put down 15% and obtained a mortgage for 30 years at 8 1/2%. What is (A) John's monthly payment and (B) the total interest cost of the loan?

B. $202,294.80

A. $135,000 × .85 = $114,750; $114,750 / $1,000 = 114.75; 114.75 × $7.69 (Table 15-1) = $882.43;

B. $882.43 × 30 × 12 = $317,674.80; $317,674.80 - $114,750.00 = $202,924.80.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

68) Alice Roa is concerned about the financing of a home. She saw a home selling for $120,000. If she puts 10% down, find her monthly payment and total cost of interest over the cost of the loan given each assumption:

A. 30 years 8%

B. 30 years 9%

C. 30 years 10%

D. 30 years 11%

B. $869.40; $204,984;

C. $948.24; $233,366.40;

D. $1,029.24; $262,526.40

A. $120,000 × .90 = $108,000; $108,000 / $1,000 = 108; $108 × $7.34 = $792.72 × 30 × 12 = $285,379.20 - $108,000 = $177,379.20; B. 108 × $8.05 = $869.40 × 360 = $312,984 - $108,000 = $204,984; C. 108 × $8.78 = $948.24 × 360 = $341,366.40 - $108,000 = $233,366.40; D. 108 × $9.53 = $1,029.24 × 360 = $370,526.40 - $108,000 = $262,526.40.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Analyze

Type: Static

Accessibility: Keyboard Navigation

69) Joy Linman bought a home in Boca Raton, Florida, for $350,000 with a down payment of $50,000. Her rate of interest is 9 ½% for 25 years. Calculate Joy's monthly mortgage payment.

$350,000 - $50,000 = $300,000; $300,000 / $1,000 = 300; 300 × $8.74 = $2,622.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

70) Joy Linman bought a home in Boca Raton, Florida, for $350,000 with a down payment of $50,000. Her rate of interest is 9 ½% for 25 years. Calculate the total cost of interest for Joy Linman.

Monthly payment: $350,000 - $50,000 = $300,000; $300,000 / $1,000 = $300; $300 (Table 15-1) × $8.74 = $2,622; Total payments = $2,622 × 25 × 12 = $786,600 - $300,000 = $486,600.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

71) With a selling price $88,000, a down payment of $24,000, and a mortgage at 13% for 30 years, calculate:

A. Principal

B. Payments per $1,000

C. Monthly mortgage payment

A. $64,000;

B. $11.07;

C. $708.48

A: $88,000 - $24,000 = $64,000; B. $11.07 (13%, 30 years); C. $64,000 / $1,000 = 64; 64 × $11.07 = $708.48.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

72) With a selling price $95,000, a down payment of $20,000, and a mortgage rate of 10% for 30 years, calculate:

A. Principal

B. Payments per $1,000

C. Monthly mortgage payment

A. $95,000 - $20,000 = $75,000; B. $8.78 (Table 15-1); C. 75 × $8.78 = $658.50.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

73) With a selling price of $88,000, a down payment of $24,000, and a mortgage at 13% for 30 years, calculate the total cost of interest.

$88,000 - $24,000 = $64,000; $64,000 / $1,000 = 64; 64 × $11.07 (Table 15-1) = $708.48; $708.48 × 360 = $255,052.80 - $64,000 = $191,052.80.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

74) With a selling price $95,000, a down payment of $20,000, and a mortgage at 10% for 30 years, calculate the total cost of interest.

$95,000 - $20,000 = $75,000; $75,000 / $1,000 = 75; 75 × $8.78 (Table 15-1) = $658.5; $658.5 × 30 × 12 = $237,060 - $75,000 = $162,060

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

75) Assume a selling price of $88,000, a down payment of $24,000, and a mortgage at 13% for 30 years. If the loan was for 25 years, what would be the difference in the total interest cost of the loan?

25 years: 88,000 - 24,000 = 64,000; 64,000 / 1,000 = 64; 64 × 11.28 = 721.92; 721.92 × 25 × 12 = 216,576; 216,576 - 64,000 = 152,576;

30 years: 64 × 11.07 = 708.48; 708.48 × 30 × 12 = 255,052.80; 255,052.80 - 64,000 = 191,052.80;

191,052.80 - 152,576 = 38,476.80

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Analyze

Type: Static

Accessibility: Keyboard Navigation

76) Assume a selling price of $95,000, a down payment of $20,000, and a mortgage at 10% for 30 years. If the loan was for 25 years, what would be the difference in the total interest cost of the loan?

25 years: 75 × 9.09 = 681.75; 681.75 × 25 × 12 = 204,525; 204,525 - 75,000 = 129,525;

30 years: 95,000 - 20,000 = 75,000; 75,000 / 1,000 = 75; 75 × 8.78 (Table 15-1) = 658.50; 658.50 × 30 × 12 = 237,060; 237,060 - 75,000 = 162,060;

162,060 - 129,525 = $32,525

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Analyze

Type: Static

Accessibility: Keyboard Navigation

77) Use the table provided in the handbook. With a mortgage of $91,000 at 12% for 25 years, by what amount is the principal reduced the first month?

$91,000 × .12 × 1 / 12 = $910; $91,000 / $1,000 = 91; 91 × $10.54 (Table 15-1) = $959.14; $959.14 - $910 = $49.14.

Difficulty: 3 Hard

Topic: LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

78) Use the table provided in the handbook. With a mortgage of $80,000 at 13% for 25 years, by what amount is the principal reduced the first month?

$80,000 × .13 × 1 / 12 = $866.67; $80,000 / $1,000 = 80; 80 × $11.28 (Table 15-1) = $902.40; $902.40 - $866.67 = $35.73.

Difficulty: 3 Hard

Topic: LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

79) Use the table provided in the handbook. Al Bang is worried about the financing of his new home. The house sells for $70,000. If he puts down 20%, what will Al's payment be, and what would be the total cost of interest over the cost of the loan for each assumption?

A. 25 years 12%

B. 25 years 13%

C. 25 years 13 3/4%

D. 25 years 14 3/4%

A. $70,000 - $14,000 = $56,000; $56,000 / $1,000 = 56; 56 × 10.54 (Table 15-1) = $590.24; $590.24 × 300 = $177,072; $177,072 - $56,000 = $121,072;

B. 56 × 11.28 = $631.68; $631.68 × 300 = $189,504; $189,504 - $56,000 = $133,504;

C. 56 × 11.85 = $663.60; $662.60 × 300 = $199, 080; $199,080 - $56,000 = $143,080;

D. 56 × 12.62 = $706.72; $706.72 × 300 = $212,016; $212,016 - $56,000 = $156,016

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

80) With a selling price $100,000, a 20% down payment, and a mortgage of 12% for 25 years, calculate:

A. Amount of mortgage

B. Monthly payment

C. Interest portion of first payment

D. Principal portion of first payment

B. $843.20;

C. $800;

D. $43.20

A. $100,000 × .80 = $80,000; B. 80 × $10.54 (Table 15-1) = $843.20; C. $80,000 × .12 × 1 / 12 = $800; D. $843.20 - $800 = $43.20.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

81) With a selling price $150,000, a 20% down payment, and a mortgage at 13% for 25 years, calculate:

A. Amount of mortgage

B. Monthly payment

C. Interest portion of first payment

D. Principal portion of first payment

B. $1,353.60;

C. $1,300;

D. $53.60

A. $150,000 × .8 = $120,000; B. 120 × $11.28 (Table 15-1) = $1,353.60; C. $120,000 × .13 × 1 /12 = $1,300; D. $1,353.60 - $1,300 = $53.60.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment; LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

82) John Smith is buying a condominium for $190,000. He is putting down $20,000 at the time of closing. John must pay in addition 2 points. Calculate the cost of the points.

$190,000 - $20,000 = $170,000 × .02 = $3,400.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

83) Bill Smoss buys a chalet for $285,000 in the White Mountains of New Hampshire. He puts down $15,000. At the time of closing, he must pay in addition 3 points. In dollars what does that represent in regard to the points?

$285,000 - $15,000 = $270,000; $270,000 × .03 = $8,100.

Difficulty: 2 Medium

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Understand

Type: Static

Accessibility: Keyboard Navigation

84) Use the table provided in the handbook. Janet Fence bought a home for $100,000 with a down payment of $20,000. The rate of interest was 7% for 35 years. Calculate (A) her payment per $1,000 and (B) her monthly mortgage payment.

$100,000 - $20,000 = $80,000; $80,000 / $1,000 = 80; 80 × 6.39 (Table 15-1) = 511.20.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

85) Marvin Bass bought a home for $180,000, putting down $50,000. The rate of interest is 14% for 25 years. Calculate (A) Marvin's payment per $1,000 and (B) his monthly mortgage payment.

B. $1,565.20

$180,000 - $50,000 = $130,000; $130,000 /$1,000 = 130; 130 × 12.04 (Table 15-1) = $1,565.20

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

86) Marvin Bass bought a home for $180,000, putting down $50,000. The rate of interest is 14% for 25 years. Calculate the total cost of interest for Marvin Bass.

$180,000 - $50,000 = $130,000; $130,000 / $1,000 = 130; 130 × $12.04 = $1565.20; $1565.20 × 300 = $469,560; $469,560 - $130,000 = $339,560.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

87) Tom Burke buys a home in Virginia for $125,000. He puts down 40% and obtains a mortgage for 30 years at 11%. What are (A) Tom's monthly payment and (B) the total interest of the loan?

A. $125,000 × .6 = $75,000; $75,000 / $1,000 = 75; 75 × $9.53 (Table 15-1) = $714.75; B. $714.75 × 360 = $257,310 - $75,000 = $182,310.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

88) Tom Burke buys a home in Virginia for $125,000. He puts down 40% and obtains a mortgage for 30 years at 11%. If Tom could have obtained a 1% reduction from 11% to 10% in the mortgage rate, by how much would his monthly payment be reduced?

$9.53 (Table 15-1) - $8.78 = $.75; $125,000 × .6 = $75,000; $75,000 / $1,000 = 75; $.75 × 75 = $56.25.

Difficulty: 3 Hard

Topic: LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

89) Bill bought an oceanfront condominium for $79,900, with $6,900 down. Assuming an interest rate of 14 ½% for 30 years, (A) what is the monthly payment and (B) if 1 point is charged at closing, what will that be in dollars?

B. $730

A. $79,900 - $6,900 = $73,000; $73,000 / $1,000 = 73; 73 × $12.25 = $894.25; B. $73,000 × .01 = $730.

Difficulty: 2 Medium

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.; 15-01 (3) Calculate the total cost of interest over the life of a mortgage.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

90) Bill Byad bought an oceanfront condominium for $79,900 with $6,900 down. If the mortgage rate was 15% instead of 14 ½% for 30 years, what would be the difference in the monthly payment?

$12.65 (Table 15-1) - $12.25 = $.40; $79,900 - $6,900 = $73,000; $73,000 / $1,000 = 73; $.40 × 73 = $29.20.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

91) If a home sells for $150,000 with one-third down at a rate of 11% for 25 years, calculate (A) amount of mortgage and (B) the monthly payment.

B. $981

A. $150,000 - $50,000 = $100,000; B. $100,000 / $1,000 = 100; 100 × $9.81 (Table 15-1) = $981.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

92) Calculate the balance outstanding after the first payment. Given: selling price of $150,000, one-third down, and an 11% mortgage for 25 years.

$150,000 × 2/3 = $100,000; $100,000 × .11 × 1 / 12 = $916.67; $100,000 / $1,000 = 100 × $9.81 (Table 15-1) = $981; $981 - $916.67 = $64.33; $100,000 - $64.33 = $99,935.67.

Difficulty: 3 Hard

Topic: LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-02 (1) Calculate and identify the interest and principal portion of each monthly payment.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

93) Mindy bought a home for $249,500 with a down payment of $30,000. Her rate of interest is 6.5% for 35 years. Calculate her monthly payment by using the table lookup.

$249,500 - $30,000 = $219,500; $219,500 / $1,000 = 219.5 × $6.05 = $1,327.98.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

94) Shelley purchased a home in Maryland Heights, MO, for $204,000. Her down payment was 20% of the cash price, and she obtained a mortgage for 20 years at 7%. What are Shelley's (A) monthly payment and (B) total finance charges?

B. Total finance charges = $140,743.20

A. $204,000 × .80 = $163,200; $163,200 / 1,000 = $163.2 × $7.76 (Table 15-1) = $1,266.43; B. ($1266.43 × 20 × 12) - $163,200 = $140,743.20.

Difficulty: 3 Hard

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

95) With a mortgage of $100,000 at 7% for 15 years, prepare a one-month amortization schedule. What is the balance after the first month's payment?

$100,000 / $1,000 = 100; 100 × $8.99 = $899 monthly payment; I = $100,000 × .07 × 1/12 = $583.33; $899 - $583.33 = $315.67 principal reduction; $100,000 - $315.67 = $99,684.33.

Difficulty: 3 Hard

Topic: LU 15-02 Amortization Schedule–Breaking Down the Monthly Payment

Learning Objective: 15-02 (2) Prepare an amortization schedule.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation

96) Kerry has a $1,973 per month mortgage payment. He decides to refinance his $204,000 balance at 5% over 20 years. What is his new monthly payment?

$204,000/1,000 = 204; 204 × $6.60 = $1,346.40.

Difficulty: 2 Medium

Topic: LU 15-01 Types of Mortgages and the Monthly Mortgage Payment

Learning Objective: 15-01 (2) Utilize an amortization chart to compute monthly mortgage payments.

Bloom's: Apply

Type: Static

Accessibility: Keyboard Navigation