QUESTION 8 Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. There are no caps. The index was 1% at the time of origination and remained at 1% during every rate reset. Tim also had to pay 3.0 points for this loan. Compute the true APR (annualized IRR) for this loan. Assume the rate resets after 36 months and then remains constant for the remainder of the loan term.

QUESTION 8 Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. There are no caps. The index was 1% at the time of origination and remained at 1% during every rate reset. Tim also had to pay 3.0 points for this loan. Compute the true APR (annualized IRR) for this loan. Assume the rate resets after 36 months and then remains constant for the remainder of the loan term.

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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Citi Home Loan announces a new housing nance plan. To nance a house worth $255,000, borrower needs to pay 20% down and walks away with a xed-rate mort- gage. Calculate the monthly payment that the borrower needs to pay to clear the loan in 30 years. The annual interest rate is 5.85%
17. Bahati Zuri obtained an installment loan for $25,000 so he could be a partner in a new restaurant. Barak Financial is offering a loan with an APR of 9% for 36 months and 5% down payment. Niya Credit Union is offering a loan with an APR of 8% for 24 months and 10% down payment. How much does Bahati save by taking the loan that costs the least? Use the Monthly Payment on a Simple Interest Installment Loan of $100.
6. You plan to buy a house that sells for $250,000. You plan to put 10% down and finance the rest. You are exploring the following financing options: i. 30-yr mortgage with a stated annual interest of 6.5% ii. 15-yr mortgage with a stated annual interest of 6%. You plan to pay off the loan by making equal monthly payments. What would be your monthly payment if you take the 30-yr mortgage? How much (total) interest would you pay over the life of the loan? $1422.15, $286,974 b. What would be your monthly payment if you take the 15-yr mortgage? How much (total) interest would you pay over the life of the loan? $1898.68, $116,762.01 a.
None
Borrower Joe has an existing loan that requires 15 more years of monthly payments of $1,040. He is considering refinancing the loan balance of $117.095.08 with a new loan at the current market rate of 5.675% for 15-year loans. Both the old loan and the new loan require 2 points plus $500 in origination fees. What is the NPV of the refinancing decision at an opportunity rate of 5.675%?
Qualifying Scenario: Rosanne is buying a home for 900k. She has 110k in liquid assets, a 740 middle credit score, $1200 a month in revolving credit card debt and makes 200k a year. Her lender requires her to have a 90% LTV, 30/43 DTI ratios and 2 months PITI for PCL. The loan will be a 30 year fixed with a 3% interest rate. Her closing costs will be 15k. Escrows will be $1000 a month. She can buy her interest rate down by .125% by paying a half percent discount point. A .25 buy down costs 1 points and so on. She can increase her rate by .125% to get a lender credit of a half point or .25% for 1 point and so on. Does she qualify? If not, why? What can she do to qualify?
K A person purchased a $220,222 home 10 years ago by paying 20% down and signing a 30-year mortgage at 11.1% compounded monthly. Interest rates have dropped and the owner wants to refinance the unpaid balance by signing a new 20-year mortgage at 6.9% compounded monthly. How much interest will refinancing save? Money Saved: $ (Round to the nearest cent as needed.)
need help with A only. The answer to B is 7.8%please help asap
If you buy a home with less than 20% down, you will pay an additional monthly fee, PMI (private mortgage insurance), until you reach 20% equity. Keep track of when you reach 20% equity so you can request to have your PMI removed. Ken Buckmiller’s home recently appraised at $307,000. His mortgage was for $292,000 at 5% for 30 years with PMI of $299.17 per month. What is his monthly payment plus PMI? His mortgage balance is currently $184,200. Has he reached 20% equity? (Use Table 15.1.) Note: Round your intermediate calculations and final answer to the nearest cent. The answer is NOT $1,866.63 Monthly payment:????
When purchasing a $100,000 house, a borrower is comparing two loan alternatives. The first loan is an 80% loan at 4% with monthly payments of $591.75 for 15 years. The second loan is 90% loan at 5% with monthly payments of $526.13 over 25 years. What is the incremental cost of borrowing the extra money assuming the loan will be held for the full term? O 6.50% O 13.21% O 7.20% O 13.70%
None
QUESTION 5 Ann wants to buy a building. The annual NOI for the building will be $165,000. She wants to get a 20 year interest only fixed rate mortgage at an annual rate of 7.35% with annual compounding and annual payments to buy the building. The lender has a minimum Debt Service Coverage Ratio (DSCR) of 1.25. The lender also has a maximum LTV requirement of 70%. The asking price is $3,000,000. What is the largest mortgage the lender will give Ann based on both the DSCR and LTV requirements? A. $1,795,918.37 OB. $2,100,000.00 OC. $2,532,047.61 OD. $132,000.00

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