6.3: Mortgage Application Process

Front

What is the assessed value of a home?

Back

The assessed value of a home is the value assigned to it by a public tax assessor for the purpose of determining property taxes.

Front

How do you calculate property tax?

Back

Property tax is calculated by multiplying the assessed value of the property by the property tax rate (expressed as a percentage).

Front

If a home has an assessed value of $82,999 and the property tax rate is 5.3%, what is the property tax?

Back

$4,398.95

Front

What is APR in the context of a mortgage?

Back

APR (Annual Percentage Rate) is the annual rate charged for borrowing or earned through an investment, which includes any fees or additional costs associated with the loan.

Front

How do you calculate the total interest paid on a mortgage?

Back

Total interest paid can be calculated by subtracting the principal amount borrowed from the total amount paid over the life of the loan.

Front

What is a down payment?

Back

A down payment is an upfront payment made when purchasing a home, typically expressed as a percentage of the purchase price.

Front

If you borrow $187,000 at an APR of 3.4% over 10 years, what is the total interest paid?

Back

$33,850.40

Front

What is the formula for calculating monthly mortgage payments?

Back

Monthly mortgage payment = [P * r(1 + r)^n] / [(1 + r)^n - 1], where P = principal, r = monthly interest rate, n = number of payments.

Front

What is homeowner's insurance?

Back

Homeowner's insurance is a type of property insurance that covers losses and damages to an individual's home and assets in the home.

Front

How do you calculate the total monthly payment for a mortgage including taxes and insurance?

Back

Total monthly payment = Monthly mortgage payment + (Annual property tax / 12) + (Quarterly homeowner's insurance / 3).