Problem:
1. Sharon Fox decided to buy a home in Marblehead, Massachusetts, for $275,000. Her bank requires a 30% down payment. Sue Willis, an attorney, has notified Sharon that besides the 30% down payment there will be the following additional costs:
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Recording of the deed
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$ 30.00
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A credit and appraisal report
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155.00
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Preparation of appropriate documents
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48.00
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A transfer tax of 1.8% of the purchase price and a loan origination fee of 2.5% of the mortgage amount
Assume a 30-year mortgage at a rate of 10%.
a. What is the initial amount of cash Sharon will need?
b. What is her monthly payment?
c. What is the total cost of interest over the life of the mortgage?