If you buy a two-bedroom, one-bathroom condominium for $600,000 in Los Angeles, California to be used as a rental property on Airbnb with a 90% LTV fully amortizing 30-year first mortgage loan at a 6.75% fixed annual interest rate from Bank of America, and if the promissory note documenting the loan includes a 1% prepayment penalty clause, which of the following will be TRUE regarding the APR on the loan: -The APR will be higher than the effective yield to the lender if the loan is refinanced before the maturity date -The APR will be lower than the contract interest rate if the lender charges one point at loan closing and $500 for an appraisal -The APR will be lower than the effective yield to the lender if the loan is paid off before the maturity date -The APR will be higher than the contract interest rate if the loan has no points and no closing costs
If you buy a two-bedroom, one-bathroom condominium for $600,000 in Los Angeles, California to be used as a rental property on Airbnb with a 90% LTV fully amortizing 30-year first mortgage loan at a 6.75% fixed annual interest rate from Bank of America, and if the promissory note documenting the loan includes a 1% prepayment penalty clause, which of the following will be TRUE regarding the APR on the loan: -The APR will be higher than the effective yield to the lender if the loan is refinanced before the maturity date -The APR will be lower than the contract interest rate if the lender charges one point at loan closing and $500 for an appraisal -The APR will be lower than the effective yield to the lender if the loan is paid off before the maturity date -The APR will be higher than the contract interest rate if the loan has no points and no closing costs
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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If you buy a two-bedroom, one-bathroom condominium for $600,000 in Los Angeles, California to be used as a rental property on Airbnb with a 90% LTV fully amortizing 30-year first mortgage loan at a 6.75% fixed annual interest rate from Bank of America, and if the promissory note documenting the loan includes a 1% prepayment penalty clause, which of the following will be TRUE regarding the APR on the loan:
-The APR will be higher than the effective yield to the lender if the loan is refinanced before the maturity date
-The APR will be lower than the contract interest rate if the lender charges one point at loan closing and $500 for an appraisal
-The APR will be lower than the effective yield to the lender if the loan is paid off before the maturity date
-The APR will be higher than the contract interest rate if the loan has no points and no closing costs
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