Initial Expenses (Meaning & Formula)

 Initial Expenses are defined as the sum of all costs associated with the Initial Notes
Issuance and Acquisition of Initial Assets on the Initial Closing Date. The term Initial
Expenses does not include any Expenses related to the acquisition of any Remaining
Initial Assets after that date.
 Initial Expenses or Down Payment = Selling rate x Selling price
Initial Expenses (Problem & Solution)

 Suppose you buy a P3,250,000 home with a down payment of 20%. Find the down
payment by computing 20% of the purchase price.
 IE or Down Payment = 20% x P3,250,000 =P650,000

 2

Mortgage (Meaning & Formula)

 Mortgage is the amount you borrowed to buy real estate.

 Mortgage = Selling Price - Down-payment

 2
 To compute the monthly mortgage


Mortgage (Problem & Solution)

 Suppose you buy a P3,250,000 home with a down payment of 20%. Find the down
payment by computing 20% of the purchase price.
 IE or Down Payment = 20% x P3,250,000 =P650,000

 2
 Mortgage =P3,250,000 - P650,000
 Mortgage = P2,600,000

 Suppose Paul purchases a condominium and secures a loan of 2,340,000.00 for 30 years
at an annual interest rate of 6.5%. (a.) Find the monthly mortgage payment. (b.) What is
 the total of the payments over the life of the loan? (c.) Find the amount of interest paid on
the loan over the 30 years.


 2


Solution—
Amortization (Meaning & Formula)

 Amortization in simple terms, it is a period in which a debt or loan is reduced or paid off
by regular payments. Because of amortization, you’ll own the home by the end of the
loan term.

APR Loan Payoff

APR, or “annual percentage rate”, represents the interest rate paid each year on an outstanding
loan amount. Conceptually, APR represents the estimated cost of the yearly fees associated
with a specific type of borrowing. APR is a standard calculation used by lenders designed to
help borrowers compare different loan options.
Solution:-----
On-going Expenses (Meaning & Formula)

 In addition to a monthly mortgage payment, there are other ongoing expenses

associated with home ownership. Among these expenses are the costs of insurance,
property tax, and utilities such as heat, electricity, and water. Property tax is normally an
annual expense that can be paid on a monthly, quarterly, semiannual, or annual basis.

On-going Expenses (Problem & Solution)

 A homeowner has a monthly mortgage payment of ₱14,565.00 and an annual property

tax bill of ₱2,856.00. The annual fire insurance premium is ₱1,200.00. Find the total
monthly payment for the mortgage, property tax and fire insurance.
Given M = ₱14,565.00
Annual property tax bill = ₱2,856.00
Annual fire insurance premium = ₱1,200.00
Solution:
Find the monthly property tax bill by dividing the annual property tax bill by 12.
₱ 2,856.00 ÷ 12 = ₱ 238
Thus, the monthly property tas bill is ₱238.
Find the monthly fire insurance bill by dividing the annual fire insurance bill by 12.
₱1,200.00 ÷ 12 = ₱100
Thus, the monthly fire insurance bill is ₱100
Find the sum of the monthly mortgage payment, the monthly property tax bill, the monthly fire
insurance bill.
₱14, 565.00 + ₱238 + ₱100 = ₱14,903.00
Thus, the monthly mortgage payment, the monthly property tax bill, the monthly fire insurance
bill is ₱14,903.00