A borrower has secured a 30 year, $154,000 loan at 7% with monthly payments. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the new loan requiers the borrower to pay 2 points at chopsing. What is the return on investment if the borrower expects to remain in the home for the next fifteen years? Please input your answer as an annual interest rate (i.e. 8.32% would be input as 8.32).

A borrower has secured a 30 year, $154,000 loan at 7% with monthly payments. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the new loan requiers the borrower to pay 2 points at chopsing. What is the return on investment if the borrower expects to remain in the home for the next fifteen years? Please input your answer as an annual interest rate (i.e. 8.32% would be input as 8.32).

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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A borrower has secured a 30 year, $730,000 loan at 5%. 15 years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 3%. However, the up front fees to refinance, which will be paid in cash, are 5 points.. What is balance of the mortgage after 15 years? What is the amount of the fees? Should the borrower refinance if the borrower expects to remain in the home for the next fifteen years? Should the borrower refinance if she plans to relocate after seven years?
You purchase a home and have a $200,000 mortgage for 20 years at 5%. Utilize an amortization schedule. What are the periodic annual payment required for the mortgage? What are the interest payment for the first year? What is the first year principal repayment What is the balance owed at the end of the first year? What are the interest paid on the principal repayment for the second year ? What is the balance owed at the end of the second year ? Why did the interest paid on the principal repayment change in the second year?
Suppose a homeowner is evaluating two mortgages, both of which are arrangements for repaying a loan of $200,000. Mortgage C requires monthly payments at the end of each month for 15 years at a stated annual rate of 6%. Mortgage D has monthly payments, paid at the beginning of each month for 18 years, at a stated annual rate of 5.5%. Mortgage C has a lower monthly payment than Mortgage D. False True
you are taking a $100,000 mortgage loan for your business to be repaid over 5 years in equal semi-annual payments of $13,587 (that is, payments will be made at the end of each half-year). a) what is the APR on this loan, compounded semi-annually? b) what is the effective annual rate (EFF) on this loan? c) Calculate the loan amount that will be shown in the balance sheet of the business at the end of the first year. Clearly indicate what and how the calculated amount will be shown in the balance sheet.
You plan to borrow $25,000 at a 3.4% annual interest rate compounded annually. The terms require you to amortize the loan with 5 equal payments each made at the end of each year. You would like to construct an amortization schedule showing details of the payments. Answer the following questions, and choose the closest answer from the possible choices following each question: 1.To find the interest repaid in period 1 only in the financial calculator amortization worksheet, you enter P2 = 2.To find the interest repaid in period 1 only in the financial calculator amortization worksheet, you enter P1 = 3.How much total interest is repaid in periods 1 to 2?
A person borrows an amount for a new house and s/he is going to make monthly payments of 8,000 $ for the next 10 years. The nominal annual interest rate is quoted as 12%. (Assume the first instalment is going to be paid 1 month after s/he borrows.) a. Find the amount borrowed by this person. o. How much does this credit worth at the end of the last payment date? c.lf this person decides on closing his/her loan after paying the 34th instalment, how much should s/he pay? It is given that the closing fee of this credit is 1,453 $.
Consider a 20-year mortgage for $174,334 at an annual interest rate of 5%. After 8 years, the mortgage is refinanced to an annual interest rate of 2.6%. What are the monthly payments after refinancing? Round your answer to the nearest dollar.
Consider a home mortgage of $200,000 at a fixed APR of 3% for 25 years. a. Calculate the monthly payment. b. Determine the total amount paid over the term of the loan. c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest. a. The monthly payment is $ (Do not round until the final answer. Then round to the nearest cent as needed.) b. The total amount paid over the term of the loan is $ (Round to the nearest cent as needed.) c. Of the total amount paid,% is paid toward is paid % toward (Round to one decimal place as needed.) the principal, the principal, and % is paid for interest. and
You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,700,000 purchase price. The monthly payment on this loan will be $16,000. a. What is the APR on this loan? Annual percentage rate b. What is the EAR? Effective annual rate
You purchase a home and secure a 30 year equal payment loan for $200,000 at a interest rate of 5.25% APR compounded monthly. After 5 years the interest rate drops to 4.75% APR compounded monthly. The bank is charging 2 points to originate the new loan. How many months do you need to stay in the house after the refinance to make the refinance a benefit (Round to next month)?
You take out a 20-year $280,000 mortgage loan with an APR of 6% and monthly payments. In 16 years you decide to sell your house and pay off the mortgage. What is the principal balance on the loan?
You just received a 20-year, $500,000 mortgage with a 12% annual interest rate (APR). What portion of the first payment (approximately) goes towards paying the principal? Hint: find the total monthly payment first, and the first month interest payment next.

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