RESIDENTIAL MORTGAGE FINANCING: Question 1: You are considering buying a $400,000 house. Bank offers a 90 percent LTV (loan to value), a 30- year mortgage, a fixed annual rate of 6 percent, and monthly payments. Calculate the monthly payment. Question 2: i) ii) Find the remaining mortgage balance at the end of 15 years for a 30-year loan, worth $550,000, 5 percent annual interest, and monthly payments. How much total principal has the borrower paid for the 15 years? iii) How much total interests has the borrower paid for the 15 years? Question 3: Consider a 25-year loan with an annual interest rate of 7 percent and monthly payments of $1,201.52 (to be precise). The discount points charged by the lender at origination are 3 percent. Additional fees paid to other third parties (i.e., not the lender) is $4,000. Required: a. Calculate the loan amount? b. What is the lender's yield/IRR? c. What is the effective borrowing cost (EBC)?
RESIDENTIAL MORTGAGE FINANCING: Question 1: You are considering buying a $400,000 house. Bank offers a 90 percent LTV (loan to value), a 30- year mortgage, a fixed annual rate of 6 percent, and monthly payments. Calculate the monthly payment. Question 2: i) ii) Find the remaining mortgage balance at the end of 15 years for a 30-year loan, worth $550,000, 5 percent annual interest, and monthly payments. How much total principal has the borrower paid for the 15 years? iii) How much total interests has the borrower paid for the 15 years? Question 3: Consider a 25-year loan with an annual interest rate of 7 percent and monthly payments of $1,201.52 (to be precise). The discount points charged by the lender at origination are 3 percent. Additional fees paid to other third parties (i.e., not the lender) is $4,000. Required: a. Calculate the loan amount? b. What is the lender's yield/IRR? c. What is the effective borrowing cost (EBC)?
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter5: Making Automobile And Housing Decisions
Section: Chapter Questions
Problem 7FPE
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