3. You are purchasing a new home and need to borrow $325,000 from a mortgage lender. The mortgage lender quotes you a rate of 6.5% APR for a 30-year fixed rate mortgage (with payments made at the end of each month). The mortgage lender also tells you that if you are willing to pay one point, they can offer you a lower rate of 6.25% APR for a 30-year fixed rate mortgage. One point is equal to 1% of the loan value. So if you take the lower rate and pay the points, you will need to borrow an additional $3,250 to cover points you are paying the lender. Assuming that you do not intend to prepay your mortgage (pay off your mortgage early), are you better off paying the one point and borrowing at 6.25% APR or just taking out the loan at 6.5% without any points?

3. You are purchasing a new home and need to borrow $325,000 from a mortgage lender. The mortgage lender quotes you a rate of 6.5% APR for a 30-year fixed rate mortgage (with payments made at the end of each month). The mortgage lender also tells you that if you are willing to pay one point, they can offer you a lower rate of 6.25% APR for a 30-year fixed rate mortgage. One point is equal to 1% of the loan value. So if you take the lower rate and pay the points, you will need to borrow an additional $3,250 to cover points you are paying the lender. Assuming that you do not intend to prepay your mortgage (pay off your mortgage early), are you better off paying the one point and borrowing at 6.25% APR or just taking out the loan at 6.5% without any points?

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

See similar textbooks

Similar questions

You can afford a $1500 per month mortgage payment. You've found a 30 year loan at 5.7% interest.a) How big of a loan can you afford? (Round to the nearest cent, as needed.)b) How much total money will you pay the loan company? (Round to the nearest cent, as needed.)c) How much of that money is interest? (Round to the nearest cent, as needed.)
Class, Assume you took a 30-year mortgage loan in the amount of $300,000. If the mortgage rate is 3.75%, what is the monthly payment?
Your parents shop around and a different bank is willing to lend them a $750,000 30-year mortgage with payments of $4,865 per month. What is the implied APR of this loan?
You can afford an $800 per month mortgage payment. You found a 30-year loan at 6% interest. How big of a loan can you afford? How much will you pay the loan company? How much of that money is interest?
You want to buy a $216,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan at 3.25% interest for the rest.a) What is the amount of the down payment?b) What will the amount of the mortgage?c) The bank charges 2 points on the loan. What is the amount charged for points?
Suppose that you purchased a house with a $140,000 mortgage (30-year fixed at 6% with a payment of $839.37) five years ago. The loan balance is currently $130,276 and you can refinance that balance at 5% with a new 30-year fixed rate mortgage. You anticipate being in the house for another six years, at which point the balance on your current mortgage would be $114,032. If you refinanced at the terms above, what would be the difference in the loan balances? O $1,329 O $1,871 O $2,471 O $3,132 O $3,860 2
You plan to purchase an $80,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate offered to you is 8.00 percent. You will make a down payment of 20 percent of the purchase price. a. Calculate your monthly payments on this mortgage.b. Calculate the amount of interest and, separately, principal paid in the 127th payment.c. Calculate the amount of interest and, separately, principal paid in the 159th payment.d. Calculate the amount of interest paid over the life of this mortgage.
You plan to purchase a $160,000 house using a 15-year mortgage obtained from your local credit union. The mortgage rate offered to you is 6.5 percent. You will make a down payment of 15 percent of the purchase price. a. Calculate your monthly payments on this mortgage. b. Calculate the amount of interest and, separately, principal paid in the 25th payment. c. Calculate the amount of interest and, separately, principal paid in the 80th payment. d. Calculate the amount of interest paid over the life of this mortgage. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a. Monthly payment b. Amount of interest Amount of principal Amount of interest Amount of principal d. Amount of interest paid C. Amount
You need a 25-year, fixed-rate mortgage to buy a new home for $200,000. Your mortgage bank will lend you the money at a 6.6 percent APR for this 300-month loan. However, you can afford monthly payments of only $900, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. Required: How large will this balloon payment have to be for you to keep your monthly payments at $900? A) 48,522.47 B) 341,563.19 C) 67,932.38 D) 366,212.08 E) 352,127.00 Only typing answer Please explain step by step without table and graph
You purchase a home costing $480,000 with a 20% down payment. After shopping around for a mortgage, you select a lender who offers you two options for 30-year mortgages with monthly payments: Option I: A rate of 2.75% (APR) and an upfront fee (due immediately) of $3,840 Option II: A rate of 2.65% (APR) and an upfront fee (due immediately) of $9,600. a. Compute the monthly loan payment for each option. b. Compute the outstanding loan balance after 10 years for each option. c. If you prefer a lower true interest rate, which one should you choose? d. If you anticipate staying in the house for 10 years, which option should you choose?
Let’s assume that you plan to purchase a house which is selling for $350,000 today. You will make a monthly payment for the next 30 years, with an annual interest rate of 3%. What will be the amount of your monthly mortgage (i.e., home loan) payment? answer choices $1,890.37 $1,400.01 $1,475.61 $1,228.14
The bank offers you a 20 year mortgage for $200,000 at an interest rate of 8% . The term of the mortgage is 5 years. a) What are your monthly payments? b) How much of the 30th payment is applied to interest? How much to principal? c) Under the monthly payment schedule, what do you still owe after 5 years? d) If you make payments every 2 weeks instead, what are your payments? e) Under the biweekly payment schedule, how much do you owe after 5 years?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS