Ann wants to buy an office building which costs $1,000,000. She obtains a 30 year fully amortizing fixed rate mortgage at 80% LTV, an annual interest rate of 4.5%, with monthly compounding and monthly payments. The mortgage has a 3% prepayment penalty if the borrower prepays in the first 5 years. Suppose Ann makes the required monthly payment for 3 years and prepays after her final monthly payment at the end of 3 years. What is the annualized IRR on Ann’s mortgage

Q: Mary is buying a town house priced at $360,000.00. Mortgage A calls for her to make equal monthly…

A: Option b: This option is correct. Step 1:We have to calculate the monthly payments with the first…

Q: Suzan Long is considering buying a home for$350,000.(a) If she makes a down payment of $50,000…

A: In this problem, a person purchases a home for $350,000 and make down payment of $50,000. The…

Q: xplain what is meant by the term ‘financial distress’. If we assume that financial distress exists,…

A: Explain what is meant by the term ‘financial distress’ Answer: Meaning of  'Financial distress' -…

Q: John wants to buy a property for $105,000 and wants an 80% loan for $84,000. A lender indicates that…

A: The mortgage loans are secured loans and these loans are paid by the monthly payments that carry the…

Q: Chuck Wells is planning to buy a Winnebago motor home. The listed price is $155,000. Chuck can get a…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Sandra gets a $250,000, 30 year mortgage with annual payments of 4.0% rate.  What is the balance of…

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Q: 10) Jake and James received a 15-year mortgage of $300,000 to purchase a condominium. They…

A: Answer Sheet: Formula Sheet: The amortization period will be shortened by 1.9 years

Q: Roger and Susan are negotiating a mortgage on a new home. They have decided that the maximum…

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

Q: Dottie wants to buy a 150,000 house and puts a down payment of 60,000. He makes monthly payments for…

A: Given:

Q: Hiram, a real estate professional, is representing a client interested in purchasing a 10-unit…

A: Monthly mortgage refers to an amount that is paid every month for the repayment of a loan amount…

Q: The Fritzes are buying a house that sells for $74,000. The bank is requiring a minimum down payment…

A: Here, Cost of Property is $74,000 Required Down Payment is 20% Closing Cost Point is 4 points

Q: The Fritzes are buying a house that sells for $92,000. The bank is requiring a minimum down payment…

A: Here,Cost of House is $92,000Down Payment is 15%Closing Point is 3%

Q: Pedro buys a condo for $629,000, with a down payment of $40,000. He takes out a 30-year mortgage for…

A: Loan amount (P) = $589,000 Monthly interest rate (r) = 0.0025 (i.e. 0.03 / 12) Monthly period of…

Q: Seema takes out a 4 year mortgage for $1,125,000 at an interest rate of i(12) = 2.625%. The…

A: Amortization is a process of gradually paying off a debt or loan over a period of time through…

Q: A woman buys a house for $265,000. She pays $70,000 down and takes out a mortgage at 6.6% on the…

A: Mortgage amortization refers to a schedule which is prepared to shows the periodic loan payments,…

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A: We need to use loan amortisation formula to calculate monthly payment. PMT=P*r1-1(1+r)n where…

Q: (a) What will be the monthly payment? Susan will pay $ each month. (Round to the nearest cent as…

A: Monthly payments refer to the specified amount that a borrower is required to repay on a loan each…

Q: Hector and Maria purchase their first home for $138,000. They make a 10% down payment and finance…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: You purchase a home for $350 000. At the time of purchase you make a downpayment of $75 000. The…

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Q: Ann obtains a 30 year Fixed Rate, Constant Payment Mortgage with monthly payments for $4,500,000 at…

A: Balloon payment is final payment required to be made to settle the loan amount.

Q: Tara has just bought a house for $930,000 with a 30% down payment and a 70% mortgage loan for 20…

A: Cost = $930000 downpayment = 30%*$930000 = $279000 Loan = $930000-$279000 = $651000 Monthly interest…

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Q: Max buys a $2,000,000 house and makes a $500,000 down payment. The mortgage is for 30 years at 4%…

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Q: Ann is looking for a fully amortizing 30 year Fixed Rate Mortgage with a mortgage amount of $4,500…

A: Mortgage:A mortgage represents a financial arrangement where an individual or entity borrows funds…

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.