One year ago you took out a $300,000, 25-year fixed-rate mortgage at a rate of 3.5%, compounded semi-annually. You have made 12 monthly payments. Your mortgage loan offers a prepayment privilege of $5,000 to be applied directly against the mortgage balance. If you take advantage of this prepayment privilege today and maintain the same level of monthly payments, by how much will you reduce your mortgage amortization period Round to the nearest month. Select one: a. 8 months b. 2 months C. 4 months d.

One year ago you took out a $300,000, 25-year fixed-rate mortgage at a rate of 3.5%, compounded semi-annually. You have made 12 monthly payments. Your mortgage loan offers a prepayment privilege of $5,000 to be applied directly against the mortgage balance. If you take advantage of this prepayment privilege today and maintain the same level of monthly payments, by how much will you reduce your mortgage amortization period Round to the nearest month. Select one: a. 8 months b. 2 months C. 4 months d.

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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Suppose that you are currently making monthly paymentson a $163,133.00 20-year mortgage at 3.84% interest compound monthly. For the last 5 years , you have been paying the regular, monthly payments. You now have the option to refinance your current mortgage with a new 12-year mortgage that has an interest rate of 2.99% compounded monthly. Note that the lender of the new loan has a closing cost fee of $1,100 (for title insurance,home appraisal costs, etc. )for the new ( refinanced)mortgage. The lender stipulates that closing cost must be paid in cash and cannot be part of the new loan. You are to determine whether you would save or lose money in interest if you were to refinance your home. Take the closing into account when determining if you would save or lose money.
A $230,000 mortgage has a stated annual rate of 4.5% on a 30 year loan. Approximately how many payments would it take to pay off the loan if you made payments of $2000 each month? (NOTE: don't forget to "undo" to get your formula back into the payment amount in your table after changing for this question!)
You have decided to refinance your mortgage. You plan to borrow whatever is outstanding on your current mortgage. The current monthly payment is $2,356 and you have made every payment on time. The original term of the mortgage was 30 years, and the mortgage is exactly four years and eight months old. You have just made your monthly payment. The mortgage interest rate is 7.500% (APR). How much do you owe on the mortgage today? (Note: Be careful not to round any intermediate steps less than six decimal places.) The amount you owe today is $ (Round to the nearest dollar.)
A borrower made a constant payment mortgage loan 8 years ago for $400,000 at 12 percent interest for 30 years. 1. What is the monthly payment? 2. What is the current loan balance? 3. Assume this is homeowner has been offered a chance for refinance for the amount at the current balance for 22 years at 10.5% interest rate. What is the monthly payment if the homeowner chooses to refinance? 4. If the origination fees and closing costs are $25,500, and the costs are not financed by the lender. What is the effective cost of refinancing? Should this homeowner refinance? 5. If this homeowner plans to sell the house in 5 years, should this homeowner refinance (show your answer with the effective annual rate)? use excel to get the answers and show the formulas
Imagine you get a $450,000 closed floating rate mortgage (no CMHC needed) having a three-year term and amortized over 25 years. Although the interest rate on the mortgage would change, your monthly payments would remain fixed for the term. Monthly payments would be calculated based on APR of %4.8 compounded monthly and amortization period of 25 years. The actual amount of the interest accrued will be deducted from your fixed monthly payments and the rest would be used for principal repayment. Now, assume that the floating rate itself is 4.2% for the first 6 months, then suddenly jumps to 6% for the next 12 months, then drops to 3.6% for the next 6 months, and then declines to 3% for the final 12 months. Note that all rates are quoted as an APR and compounded monthly. Part A: How much money do you owe (i.e. what is the outstanding balance) after 18 months? Part B: How much interest did you pay over the term of the mortgage? How much was principal?
5) You have a 25-year $800,000 mortgage that you make monthly payments on. The quoted rate of is 4.54% compounded semi-annually. Show the amortization table for the first 3 payments. How much interest payments have you done after the first 3 payments. What is the balance of the loan at the end of year 12?
Four years ago, you took out a $375,000, 25-year mortgage with an interest rate of 5% and a 3% prepayment fee applicable for the first five years. If you decide to pay off this mortgage now, what will the balance due be?
You take out a 30-year mortgage (360 months) with a face value of $200,000 and a stated annual rate of 6.0 percent. As you can calculate, your required monthly payment is $1.199.10. However, with each payment, you send your lender an extra $250.00, which directly reduces the mortgage balance each month. What is the mortgage balance after 42 months? Enter your answer to the nearest cent, with no punctuation other than a decimal. For example, if your answer is $28,542.19, enter "28542.19". Note that Canvas will delete trailing zeros, if entered.

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