Solution Library

Life Insurance Recommendations For Home Loan Takers

Question

Michelle and Ken Dunn, both in their mid-20s, have been married for 4 years and have two preschool-age children.  Ken has an accounting degree and is employed as a cost accountant at an annual salary of $62,000.  They’re now renting a duplex but wish to buy a home in the suburbs of their rapidly developing city.  They’ve decided they can afford a $215,000 house and hope to find one with the features they desire in a good neighborhood.

The insurance costs on such a home are expected to be $800 per year, taxes are expected to be $2,500 per year, and annual utility bills are estimated at $1,440—an increase of $500 over those they pay in the duplex.  The Dunns are considering financing their home with a fixed-rate, 30-year, 6% mortgage.  The lender charges 2 points on mortgages with 20% down and 3 points if less than 20% is put down (the commercial bank the Dunns will deal with requires a minimum of 10% down).

Other closing costs are estimated at 5% of the home’s purchase price.  Because of their excellent credit record, the bank will probably be willing to let the Dunns’ monthly mortgage payments (principal and interest portions) equal as much as 28% of their monthly gross income.  Since getting married, the Dunns have been saving for the purchase of a home and now have $44,000 in their savings account.

Considering the Dunns do not have any life insurance, what amounts and type(s) would you recommend for the couple?

Summary

The question belongs to Finance and it discusses about a scenario where a couple wants to buy a house with loan from bank. The solution discusses about the type of life insurance and amounts that can be recommended for Dunns couple.

Total Word Count 194

Download Full Solution

Comments

  • HWA
    Rasha

    this is a very good website

  • HWA
    maani

    I have 50 questions for the same test your page is showing only 28

  • HWA
    joeanne

    hi can you please help or guide me to answer my assignments. thanks

  • HWA
    joeanne

    hi can anyone help or guide me to my assignments. thanks

  • HWA
    Monik


  • HWA
    Cristina

    This solution is perfect ...thanks

  • HWA
    Janete

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA
    Sandeep

    Perfect bank of solution. 

  • HWA
    Oxana

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA
    Giuseppe

    works fine.