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To obtain an FHA mortgage for $50,000 or more, the home buyer must hav

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To obtain an FHA mortgage for $50,000 or more, the home buyer must hav  [#permalink]

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New post 06 Feb 2019, 02:42
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Question Stats:

71% (02:29) correct 29% (03:26) wrong based on 17 sessions

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To obtain an FHA mortgage for $50,000 or more, the home buyer must have a down payment equal to 4 percent of the first $25,000 of the mortgage amount and 5 percent of the portion in excess of $25,000. At settlement the buyers pays a mortgage-insurance premium equal to 3 percent of the mortgage amount. What is the maximum FHA mortgage, if any, a buyer can obtain if the buyer has only $6,000 available for the down payment and insurance premium?

A. $62,500
B. $71,875
C. $78,125
D. $125,000
E. The home buyer cannot obtain an FHA mortgage.

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Re: To obtain an FHA mortgage for $50,000 or more, the home buyer must hav  [#permalink]

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New post 06 Feb 2019, 07:17
1
Bunuel wrote:
To obtain an FHA mortgage for $50,000 or more, the home buyer must have a down payment equal to 4 percent of the first $25,000 of the mortgage amount and 5 percent of the portion in excess of $25,000. At settlement the buyers pays a mortgage-insurance premium equal to 3 percent of the mortgage amount. What is the maximum FHA mortgage, if any, a buyer can obtain if the buyer has only $6,000 available for the down payment and insurance premium?

A. $62,500
B. $71,875
C. $78,125
D. $125,000
E. The home buyer cannot obtain an FHA mortgage.


if any one has a simple solution then please share :

I backsolved the question starting option C
78125
so
1 . @ 4% against 25,000 = 1000 $
2. excess of 25,000 , interest @ 5% ; we have 78125-25000= 53,125 $
53125 * 5% = 2656 $

3. mortgage-insurance premium equal to 3 percent of the mortgage amount ; 78125 * 3% = 2343 $

sum it all 1000+ 2656+ 2343 = 6000 $ which is equal to amount available for down payment and insurance premium

IMO C
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Re: To obtain an FHA mortgage for $50,000 or more, the home buyer must hav  [#permalink]

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New post 06 Feb 2019, 12:49
1
Archit3110 wrote:
Bunuel wrote:
To obtain an FHA mortgage for $50,000 or more, the home buyer must have a down payment equal to 4 percent of the first $25,000 of the mortgage amount and 5 percent of the portion in excess of $25,000. At settlement the buyers pays a mortgage-insurance premium equal to 3 percent of the mortgage amount. What is the maximum FHA mortgage, if any, a buyer can obtain if the buyer has only $6,000 available for the down payment and insurance premium?

A. $62,500
B. $71,875
C. $78,125
D. $125,000
E. The home buyer cannot obtain an FHA mortgage.


if any one has a simple solution then please share :

I backsolved the question starting option C
78125
so
1 . @ 4% against 25,000 = 1000 $
2. excess of 25,000 , interest @ 5% ; we have 78125-25000= 53,125 $
53125 * 5% = 2656 $

3. mortgage-insurance premium equal to 3 percent of the mortgage amount ; 78125 * 3% = 2343 $

sum it all 1000+ 2656+ 2343 = 6000 $ which is equal to amount available for down payment and insurance premium

IMO C



Simpler Solution:

4% of first 25000=1000$
Now,5% down payment beyond 25000$
Also, 3% on insurance on total mortgage
3% insurance on first 25000$=750$

total down payment and insurance on first 25000$=1750$
Amount left=6000-1750=4250$
Now, 5% down payment +3% insurance on amount beyond 25000 = 4250
i.e. 8% of mortgage amount beyond 25000=4250$
==>mortgage amount beyond 25000=425000/8=53125$

Total mortgage=25000+53125=78125$

(Solution looks big but can be done in 2 lines when solving for yourself)
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Re: To obtain an FHA mortgage for $50,000 or more, the home buyer must hav   [#permalink] 06 Feb 2019, 12:49
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