Questions: Martha is buying a house that sells for 97,000. The bank is requiring a minimum down payment of 15%. To obtain a 20-year mortgage at 10.0% interest, she 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 15% down payment. c) Find the cost of 2 points on the mortgage. a) The required down payment is

Martha is buying a house that sells for 97,000. The bank is requiring a minimum down payment of 15%. To obtain a 20-year mortgage at 10.0% interest, she 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 15% down payment.
c) Find the cost of 2 points on the mortgage.
a) The required down payment is

Transcript text: Martha is buying a house that sells for $\$ 97,000$. The bank is requiring a minimum down payment of $15 \%$. To obtain a 20 -year mortgage at $10.0 \%$ interest, she 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 $15 \%$ down payment. c) Find the cost of 2 points on the mortgage. a) The required down payment is $\$$ $\square$

Solution

Solution Steps

Step 1: Calculate the Required Down Payment

To calculate the required down payment, multiply the house price ($97000) by the minimum down payment percentage (15%): \[ \text{Required Down Payment} = 97000 \times \frac{15}{100} = $14550 \]

Step 2: Calculate the Amount of the Mortgage

To calculate the amount of the mortgage, subtract the required down payment from the house price: \[ \text{Amount of Mortgage} = 97000 - 14550 = $82450 \]

Step 3: Calculate the Cost of Points on the Mortgage

To calculate the cost of points on the mortgage, multiply the amount of the mortgage by the number of points (2) divided by 100: \[ \text{Cost of Points} = 82450 \times \frac{2}{100} = $1649 \]