Question

The price of a condominium is $73,000. The bank requires a 5% down payment and one point at the time of closing. The cost of the condominium is financed with a 30-year fixed-rate mortgage at 6.5%. Use the following formula to determine the regular payment amount. Complete parts (a) through (c) below. a. Find the required down payment.(b) Find the amount of the mortgage.(c) How much must b paid for the one point at closing?

Answer 1

a) The required down payment

Down payment = Percentage of down payment x Condominium price

5% = 0.05

$73000\times0.05=3650$

Answer: $3650

b) The amount of the mortgage

Loan amount = Condominium price - Down payment

$73000-3650=69350$

Answer: $69350

c) The cost of one point

One point mean 1% of amount financed has to be paid at closing, so:

Cost of one point = Loan amount x 1%

And we have 1% = 0.01

$69350\times0.01=693.5$

Answer: $693.5