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13 Jul 2019

Scenario: Mortgage Loan = $150,000 Loan length = 30 years Interest rate = 6% annually the monthly payment would be $899 Question: If you decide to amortize the loan over 15 year, what will be your monthly payment? and please explain how to do amortize mortgage as my book does a poor job of explaining it.

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Bunny Greenfelder
Bunny GreenfelderLv2
16 Jul 2019

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You purchase a house for $200,000 by getting a mortgage for $160,000 and paying a $40,000 down payment (20%). You can get a 30 year mortgage with a 3.3% interest rate.

A. What would be your monthly payment? ______________

B. What would be the loan balance half way through in 15 years? __________________

Please show all work, thanks!

Jane plans to borrow from a bank to finance her investment in a real estate project. She considers an ARM loan with three-year loan term, $100,000 loan amount. The loan has the following terms: 1) initial interest rate = 8.5%; 2) margin = 3%; 3) loan amortization period = 15 years; 4) frequency of adjustment = 1 year (monthly compounding); 5) interest rate cap = none; 6) payment cap = none; and 7) discount points = 3%; 8) no negative amortization is allowed. The index rates (i.e., based on 3 year treasure rate) for next two years (i.e., the 2nd and 3rd year) are expected to be 11% and 8%, respectively.

(a) If the loan will be repaid after 3 years, what would be the monthly payment and the ending loan balance for each of the three years?

(b) What is the effective mortgage yield for borrowing this mortgage?

(c) Now suppose that there is an annual interest rate cap of 2% specified in the loan contract. What is the effective mortgage yield for borrowing this mortgage, assuming that no negative amortization is allowed?

(d) Now suppose, instead of the annual interest rate cap of 2%, the bank prefers a 3% annual payment cap. Assume that negative amortization is allowed, what is the effective mortgage yield for borrowing this mortgage?

Please show your work how you calculate them. so I can understand how you did them

Thanks

Q. 1

Part 1

For a $400,000 mortgage at 6% annually, accrued monthly, fully amortized

a. What is the monthly payment____________ and what would be the total interest if paid in 15 years? _______________

b. What is the monthly payment____________ and what would be the total interest if paid in 30 years? _______________

If I have a mortgage of $300,000 payable in 360 payments at 5.25% APR

What is my monthly payment? _______________

What is my balance after 2 years? _______________

What would my payment be if I had a balloon payment of $100,000? _______________

If I can afford $1400 per month, and loans were available at 3.25% for 30years

What amount of loan would be available to me? ­_______________

What is my balance in 5 years? _______________

What if I could increase my monthly payment to $1800, what amount could I have? _______________

How long will it take to pay off my $425,000 mortgage @4.5%

If I pay $2500 per month? _______________

If I pay $3000 per month? _______________

For a loan of $385,000, amortized for 25 years payable at $1500/mo

What is the interest rate? _______________

What is the balance after 3 years of paying? _______________

Part 2

I have a loan for $339,000 amortized for 20 years payable at $1500/mo at 4.15%

What is the balloon payment at the end of the term? _______________

What would my payment be if it were fully amortized? _______________

What would the monthly payment be on an interest only loan of $750,000

@7.61% with a term of 5 years? _______________

@6.33% with a term of 3 years? _______________

If I made no payments, what amount would the principle be after one year @6.25% _______________

Paying $1500/mo for 15 years @ 4.85 with a balloon payment of $25,000 will get you what original loan amount? _______________, what amount if no balloon payment? ________________

You could rent an apartment for $850/mo, but decided to buy instead and will live there for 4 years while attending VIU

a. What size mortgage would this same rent pay for, 0% down, using a 30 year amortization @4.5% with a 4 year term? ___________

b. With a 5% down payment, what would your maximum purchase price be? _______________

c. What is the loan balance in 4 years? _______________

d. If property values on purchase in #b above, rose 4.6% per year, what is the value in 4 years? _______________

e. How much equity did you gain? ­_______________

f. Assuming you paid 5% down payment, had $15,000 in selling/buying costs, what is your % return on equity invested? _______________

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