1. SECTION 10-1 pp
Mortgage Loans

2. Section Objective
Compute:
mortgage loan amount

3. Key Words to Know mortgage loan (p. 344)
A property loan that gives the lender the right to seize and sell the property if the borrower fails to make the payments on the loan.

4. Formula
Mortgage Loan = Selling – Down
Amount Price Payment

5. The Hunt to Find a Home p. 344
Why do you think a majority of homeowners take out 15- to 30-year mortgages as opposed to a 5-year mortgage?

6. Example 1
Jessica and Kirk Cramer consider purchasing a new home for $140,000. A 15 percent down payment is required.
What is the amount of the mortgage loan needed to finance the purchase?

7. Example 1 Answer: Step 1 Find the down payment.
$140,000 × 15% = $21,000

8. Example 1 Answer: Step 2 Find the mortgage loan amount.
Selling Price – Down Payment
$140,000 – $21,000 = $119,000

9. Practice 1
Santos and Anna Rivera made an offer of $158,000 on a home that was priced at $164,000. Their offer was accepted. They made a down payment of 25 percent and financed the remaining amount.
What is the amount of the mortgage?

10. Practice 1 Answer
$118,500

11. Practice 2
Mary Schoen is buying a house that costs $179,000. She made a 25 percent down payment.
What is the amount of the mortgage loan needed to finance the purchase?

12. Practice 2 Answer
$134,250

13. END OF SECTION 10-1
Mortgage Loans