16) In the past a common practice for selling a home was to allow the buyer to "assume the mortgage" this meant that the buyer would be able to take over the existing mortgage of the seller. The advantage of doing this was that the existing mortgage might have a lower interest rate than the current mortgages. Suppose that a seller of a home has an interest rate of 3% on his existing mortgage and it is locked in for the next 5 years. Suppose also that the best interest rate buyers can ger for a new mortgage is 6%. If the mortgage is assumed by the buyer, who benefits: the buyer or the seller?
16) In the past a common practice for selling a home was to allow the buyer to "assume the mortgage" this meant that the buyer would be able to take over the existing mortgage of the seller. The advantage of doing this was that the existing mortgage might have a lower interest rate than the current mortgages. Suppose that a seller of a home has an interest rate of 3% on his existing mortgage and it is locked in for the next 5 years. Suppose also that the best interest rate buyers can ger for a new mortgage is 6%. If the mortgage is assumed by the buyer, who benefits: the buyer or the seller?
Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
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