Suppose you purchased a house 7 years ago and took out a mortgage for $400,000 with a5.6% interest rate. The mortgage is a 30 year mortgage with monthly payments. Today youcan refinance the loan at a 5% interest rate for a fee of $10,000. Assume that you wouldborrow just enough to repay the old loan and the refinancing fee.MonthlyAnnual Rate Life (In Years) Loan AmountPeriods PaidFeePayments30 $ 400,000.00Initial LoanRefinancing5.6%84 $0 $10,000.005.0%30If you refinance at the new rate, how much will you save per month?Monthly SavingsIf you expect to move in 6 years, would you want to refinance?YearsMonthsTime Till Move72Old LoanNew LoanLoan Balance at MoveNPV of RefinancingRefinance?

Answered: Suppose you purchased a house 7 years…

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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Let’s assume that you plan to purchase a house which is selling for $350,000 today. You will make a monthly payment for the next 30 years, with an annual interest rate of 3%. What will be the amount of your monthly mortgage (i.e., home loan) payment? answer choices $1,890.37 $1,400.01 $1,475.61 $1,228.14
Suppose you take out a 30-year mortgage for $ 225000 at 8.5% interest. The monthly payments on this loan are $ 1730.06. If you pay an extra 40% per month on your mortgage, how soon will you pay off the loan?New length in years = How much will you save in interest by making the extra payments?Saving = If you put $ 1730.06 per month into an annuity earning 10.25% interest compounded monthly for the remaining time on your original loan, how much money will you have at the end of the original 30 years?Extra savings =
Suppose you have a $175,000 30-year mortgage with a 4.5% interest rate on the loan. a. Find the monthly payment.
Suppose you borrow $1million to purchase a house. The bank offers you the fixed borrowing rate 4% APR compounded semi-annually for a 5-year term. You decide on making semi-monthly payments (every half-month) with an amortization period of 30 years. How much do you still owe at the end of the 5-year term? The answer is within $50 of the following value.
Use the mortgage loan calculator to determine how much more you would pay on a $250 000 mortgage at 5.5 percent taken out over 30 years as compared to 15 years. INTEREST MONTHLY PAYMENT RATE PERTHOUSAND DOLLARS 15 years 20 years 30 years 5.5% 8.18 6.89 5.69 5.75% 8.31 7.03 5.84
Suppose that your unsubsidized Stafford loans plus accumulated interest total $ 34000 at the time you start repayment, the interest rate is 7.5% APR, and you elect the standard repayment plan of a fixed amount each month for 10 years. What is your monthly repayment? Repayment amount = How much will you pay in interest?Interest paid =
A $230,000 mortgage has a stated annual rate of 4.5% on a 30 year loan. What was the total you paid for the house after 30 years?
You buy a house for $230000, and take out a 30-year mortgage at 6% interest. For simplicity, assume that interest compounds continuously. A) What will be your annual mortgage payment? $ per year %24
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
Suppose that a house was purchased with the buyer taking out a 20 year,$350,000 mortgage at 3% interest compounded monthly.(i) What will the monthly payments be?(ii) Find the total amount of interest paid when the loan is amortized over 20 years.
You took out a mortgage for $600,000. You need to pay $5,873 every month for 15 years. a. What is the monthly interest rate? b.
Assume we have a $500,000 mortgage at a 3.5% original interest rate, 30-year term, and monthly payments. The interest rate can be adjusted at the end of each year, and we assume the rate increases by 0.25% after the first year. What is the monthly payment for the 4th year of the loan?

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