Sharon Fox decided to buy a home in Marblehead, Massachusetts, for $286,000. Her bank requires a 25% down payment. Sue Willis, an attorney, has notified Sharon that besides the 25% down payment there will be the following additional costs:
Recording of the deed $41.00
A credit and appraisal report 166.00
Preparation of appropriate documents 59.00
In addition, there will be a transfer tax of 1.5% of the purchase price and a loan origination fee of 3% of the mortgage amount. Assume a 30-year mortgage at a rate of 9.5%.
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?(Use 360 days a year.