A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The loan will be $200,000 at 6 percent interest for 20 years.a. How would you analyze these alternatives?b. What if the biweekly loan was available for 5.75 percent? How would your answer change?

Q: Consider a mortgage loan where the periodic payment is 1 and the per period mortgage interest is 5%.…

A: Perpetuity can be defined as a cash flow of equal amount at equal intervals of time with out an end.…

Q: Suppose that you took out a mortgage loan and should repay $500 per month in the next 20 years. In…

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Q: pose you take out a 45-year $125,000 mortgage with an APR of 6%. You make payments for 5 y PR of…

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Q: l Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose a…

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Q: Suppose you had to choose between a 9% 25-year mortgage or a 8.5% mortgage with 2 discount points.…

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Q: You have decided to buy a house. You can get a mortgage rate of 5.15 percent, and you want your…

A: Solution:-When an amount is borrowed, it can either be repaid as a lump sum payment or in…

Q: Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose…

A: Amount of Loan = $ 200,000 Interest Rate(r1) =4.5% for 15 years Interest Rate(r2) = 5% for 30 years…

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A: A written agreement through which a lender gets the right to take the property that is put as a…

Q: Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose…

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Q: You are considering refinancing your home’s 30 year mortgage at a lower interest rate.  Your…

A: When the interest rate on loan drops, borrowers tend to refinance their loan becuase in such cases,…

Q: TOTAL INTEREST PAID. You are considering purchasing a home that requires $450,000 mortgage at 5.25%.…

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Q: A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The…

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Q: A borrower has secured a 30 year, $131.000 loan at 8% with monthly payments. Fifteen years later,…

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Q: maximum loan

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Q: a. What are the monthly principal and interest payments for each loan? b. What is the total amount…

A: Loan Amortization: It is the process of paying the loan amount by the borrower in periodic payments…

Q: A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The…

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Q: Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose…

A: Given,

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A: Formulas that are used:-

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Q: Considering the following information, what is the NPV if the borrower refinances the loan? Expected…

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Q: Suppose your gross monthly income is $5,300 and your current monthly payments are $575. If the bank…

A: Present value is the estimation of the current value of future cash value which is likely to be…

Q: Suppose you want to purchase a home for $525,000 with a 30-year mortgage at 4.84% interest. Suppose…

A: Price of Home = $525000 Inetest Rate(r) = 4.84%/12 = 0.4033% Downpayment = 30% Amount financed…

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A: Monthly payment (C) = $700Monthly interest rate (r) = 0.002375 (i.e. 0.0285 / 12)Number of monthly…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.