A borrower can obtain an 80 percent loan with an 8 percent interest rate and monthly payments. The loan is to be fully amortized over 25 years. Alternatively, he could obtain a 90 percent loan at an 8.5 percent rate with the same loan term. The borrower plans to own the property for the entire loan term. a. What is the incremental cost of borrowing the additional funds? (Hint: The dollar amount of the loan does not affect the answer.) b. How would your answer change if two points were charged on the 90 percent loan? c. Would your answer to part (b) change if the borrower planned to own the property for only five years?

Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the beginning, and then you make monthly payments to the lender. You’ve decided to buy a house that is valued at $1 million. You have $200,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $800,000 mortgage, and is offering a standard 30-year mortgage at a 9% fixed nominal interest rate (called the loan’s annual percentage rate or APR). Under this loan proposal, your mortgage payment will be    per month. (Note: Round the final value of any interest rate used to four decimal places.)   Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a 15-year, $800,000 loan at…

13. Mortgage payments Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the beginning, and then you make monthly payments to the lender. You've decided to buy a house that is valued at $1 million. You have $100,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $900,000 mortgage, and is offering a standard 30-year mortgage at a 10% fixed nominal interest rate (called the loan's annual percentage rate or APR). Under this loan proposal, your mortgage payment will be per month. (Note: Round the final value of any interest rate used to four decimal places.) Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a 15-year, $900,000…

am. 08.

(Loan amortization) To buy a new house, you must borrow $135,000. To do this, you take out a $135,000, 25-year, 9 percent mortgage. Your mortgage payments, which are made at the end of each year (one payment each year), include both principal and 9 percent interest on the declining balance. How large will your annual payments be? The amount of your annual payments will be $ (Round to the nearest cent.)

A borrower bought a house for $300,000; he can obtain an 80% loan with a 20-year fully amortizing, 7% interest rate and monthly payment. Alternatively, he could get a 30-year fully amortizing 90% loan at 9% What is the incremental cost of borrowing the additional fund?

Your property has net operating income of 4,500,000. Assuming you value the property with a cap rate of 6.5%, what is the DSC ratio if the lender will lend up to 75% of value and the rate is 4.5% based on a monthly pay, 30 years, fully amortizing loan?   Group of answer choices   1.43   1.35   1.51   1.27

ADD-ON LOANS vs SIMPLE INTEREST LOANS. You are borrowing $500,000 on a 30 year, 5.5% interest loan to buy a property. 18a) What will the total interest be if it was an add-on interest loan?18b) How much would the monthly payment be (for 30 years) if it was an add-on interest loan?18c) What will the total interest be if it was a simple interest amortized loan?18d) How much would be the monthly payment (for 30 years) if it was a simple interest amortized loan?

An accounting firm agrees to purchase a computer for $130,000 (cash on delivery) and the delivery date is in 270 days. How much do the owners need to deposit in an account paying 0.55%compounded quarterly so that they will have $130,000 in 270 days? (a) State the type. sinking fundamortization     ordinary annuitypresent valuefuture value (b) Answer the question. (Round your answer to the nearest cent.)

Suppose you have just purchased your first home for $550,000. At the time of purchase you could only afford to commit to a down payment of $55,000. In order to make the loan, the lender requires you to obtain private mortgage insurance (PMI) on their behalf. Suppose over time you paid down the principal of the loan to $535,000 and at that point in time you can no longer make any mortgage payments (i.e., you default on the loan). If the lender were to foreclose on your property and sell it for $508,000 (net proceeds), what would the lender's loss of principal be taking into consideration the protection of mortgage insurance? (Let's assume that the PMI in this case covers the top 25% of the loan.)