Tim buys an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARMwith an initial teaser rate of 3.75% and monthly payments. The reset margin on the loan is 300 basispoints above 1 year CMT. The index was 1% at the time of origination. Tim also had to pay 3 pointsfor this loan. Suppose the index rate will remain 1% for the life of the loan and Tim prepays themortgage in 5 years. Compute the true APR for this loan. (Write the answer as a percent so forexample 2.5% should be written as 2.5, not as 0.025.)

Step 1: Calculate Loan Points CostLoan points are a one-time upfront fee paid to the lender,…

Answered: Tim buys an apartment that costs…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Amna has a housing loan of $50,000 over 15 years with a 6% interest rate. According to the Bank he will be paying $422 monthly on this loan. What is the amount of interest and principal for the first and second installment? Assume that you have saved money for a down payment on your dream house, but you still need to borrow $12000 from your bank to complete the deal. The bank offers you a 30-year mortgage at an annual rate of 7%. Calculate a) Monthly payment/EMI b) Principal Amount and Interest for the first three months. Answer as soon as possible plsss!!
6. Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30-year, 3/1 ARM with an initial teaser rate of 3.75% and monthly payments. The reset margin on the loan is 300 basis points above 1-year CMT. The index was 1% at the time of origination. Tim also had to pay 3 points for this loan. Suppose the index rate will remain 1% for the life of the loan. Compute the true APR for this loan. 7. In Q6, compute the IRR for this loan assuming Tim will prepay in 5 years.|
Tim wants to buy an apartment that costs $750,000with an 85% LTV mortgage. Tim got a 30-year, 3/1 ARMwith an initial teaser rate of 3.75% and monthlypayments. The reset margin on the loan is 300 basispoints above 1-year CMT. The index was 1% at the timeof origination. Tim also had to pay 3 points for this loan.Suppose the index rate will remain 1% for the life of theloan. Compute the true APR for this loan.Compute the IRR for this loan assuming Tim will prepayin 5 years.
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $175,000. Chuck can get a secured add-on interest loan from his bank at 7.45% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $4,100 per month and amortize the loan in 42 months. (a) Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.) $ Can he pay off the loan and keep his payments under $4,100? Yes, under these conditions, Chuck will meet his goal. No, the monthly payment is too high. (b) What are Chuck's options to get his payments closer to his goal? (Select all that apply.) try to negotiate a higher interest rate make a lower down payment try to bargain for a higher sale price make a higher down payment try to negotiate a lower interest rate try to bargain for a lower sale price (c) Chuck spoke with his bank's loan officer, who has agreed to finance the deal with a 6.85% loan if Chuck can pay 20% down. What will Chuck's…
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $175,000. Chuck can get a secured add-on interest loan from his bank at 7.45% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $4,100 per month and amortize the loan in 42 months. (a)Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.) $ Can he pay off the loan and keep his payments under $4,100? A. Yes, under these conditions, Chuck will meet his goal. B.No, the monthly payment is too high. (b)What are Chuck's options to get his payments closer to his goal? (Select all that apply.) A. make a lower down payment B. try to bargain for a lower sale price C. make a higher down payment D. try to bargain for a higher sale price E. try to negotiate a lower interest rate F. try to negotiate a higher interest rate (c)Chuck spoke with his bank's loan officer, who has agreed to finance the deal with a 6.85% loan if…
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $175,000. Chuck can get a secured add-on interest loan from his bank at 7.45% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $4,100 per month and amortize the loan in 42 months. (a)Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.) $ Can he pay off the loan and keep his payments under $4,100? A. Yes, under these conditions, Chuck will meet his goal. B. No, the monthly payment is too high (b)What are Chuck's options to get his payments closer to his goal? (Select all that apply.) A. make a lower down payment B. try to bargain for a lower sale price C. make a higher down payment D. try to bargain for a higher sale price E. try to negotiate a lower interest rate F. try to negotiate a higher interest rate (c)Chuck spoke with his bank's loan officer, who has agreed to finance the deal with a 6.85% loan if Chuck can…
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $175,000. Chuck can get a secured add-on interest loan from his bank at 7.45% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $4,100 per month and amortize the loan in 42 months. (a) Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.) $ Can he pay off the loan and keep his payments under $4,100? Yes, under these conditions, Chuck will meet his goal.No, the monthly payment is too high. (b) What are Chuck's options to get his payments closer to his goal? (Select all that apply.) try to negotiate a higher interest ratetry to bargain for a lower sale pricetry to negotiate a lower interest ratemake a lower down paymenttry to bargain for a higher sale pricemake a higher down payment (c) Chuck spoke with his bank's loan officer, who has agreed to finance the deal with a 6.85% loan if Chuck can pay 20% down. What…
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $185,000. Chuck can get a secured add-on interest loan from his bank at 7.35% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $4,300 per month and amortize the loan in 42 months. (a) Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.) $ 4257.64 × Can he pay off the loan and keep his payments under $4,300? Yes, under these conditions, Chuck will meet his goal. No, the monthly payment is too high. (b) What are Chuck's options to get his payments closer to his goal? (Select all that apply.) □ □ □ □ □ make a lower down payment try to bargain for a lower sale price make a higher down payment try to negotiate a higher interest rate try to bargain for a higher sale price try to negotiate a lower interest rate
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $145,000. Chuck can get a secured add-on interest loan from his bank at 7.45% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $3,400 per month and amortize the loan in 42 months. (a) Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.) $ Can he pay off the loan and keep his payments under $3,400? Yes, under these conditions, Chuck will meet his goal.No, the monthly payment is too high. (b) What are Chuck's options to get his payments closer to his goal? (Select all that apply.) try to bargain for a lower sale price make a higher down payment make a lower down payment try to bargain for a higher sale price try to negotiate a higher interest rate try to negotiate a lower interest rate (c) Chuck spoke with his bank's loan officer, who has agreed to finance the deal with a 6.85% loan if Chuck can pay 20% down.…
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $155,000. Chuck can get a secured add-on interest loan from his bank at 7.35% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $3,600 per month and amortize the loan in 42 months. (a) Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.) $ Can he pay off the loan and keep his payments under $3,600? Yes, under these conditions, Chuck will meet his goal. No, the monthly payment is too high. (b) What are Chuck's options to get his payments closer to his goal? (Select all that apply.) make a higher down payment try to bargain for a higher sale price try to bargain for a lower sale price try to negotiate a lower interest rate try to negotiate a higher interest rate make a lower down payment (c) Chuck spoke with his bank's loan officer, who has agreed to finance the deal with a 6.95% loan if Chuck can pay 20% down.…
Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. In year 4, the index resets to 3.50%. What will his new mortgage payment be in year 4? (Write the answer as a number rounded to two decimals (e.g. if you get $50,66666, write 50.67).
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $155,000. Chuck can get a secured add-on interest loan from his bank at 7.35% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $3,600 per month and amortize the loan in 42 months. (a) Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.)

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