What is the initial amount of cash


Response to the following problem:

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:

Recording of the deed                                  $ 30.00

A credit and appraisal report                          155.00

Preparation of appropriate documents               48.00

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?

 

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