You are choosing between two mortgage options for a $1,000,000 property. The first option is a 60% LTV mortgage at an interest rate of 7%. The payment on this mortgage is calculated as if it were a 30 year mortgage, but the mortgage balance is due in 10 years. This loan also charges a 1% origination fee. The second option consists of two loans combined together. The primary loan (first mortgage) is a 50% LTV loan at an interest rate of 6.5%. This loan is an Interest Only loan due in 10 years and the loan charges a 1% origination fee. The secondary loan for this option is a 10% LTV loan at an interest rate of 9%. This loan is fully amortizing and is also due in 10 years and charges a 2% origination fee. What is the combined payment of the two loans that together form the 2nd loan option? Group of answer choices $1,846.7921 $2,783.4973 $3,248.4852 $3,975.094

Q: You have a choice between the following two identical properties: Property A is priced at $162,000…

A: It is the process of making decisions that involve the management of costs in order to achieve…

Q: You are purchasing a house and you are considering getting a fixed-rate mortgage (FRM) for $750,000.…

A: Required monthly payments for the mortgage is calculated using excel PMT function Required monthly…

Q: Compute the face value of a 30 year fixed rate mortgage with a monthly payment of $1,200, assuming a…

A: A mortgage refers to a covered loan borrowed to purchase a property with the property itself acting…

Q: l Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose a…

A: Loans are paid by equal monthly payments and these monthly payments carry the payment for interest…

Q: A homeowner can obtain a $250,000, 30-year fixed-rate mortgage at a rate of 6.0 percent with zero…

A: Mortgage refers to the covered loan borrowed for the purchase or the maintenance of the property…

Q: You are borrowing $250,000 to buy a house, using a standard, 30-year mortgage. Your mortgage lender…

A: A mortgage is a covered loan taken out to purchase a property with the property itself acting as…

Q: Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose…

A: Amount of Loan = $ 200,000 Interest Rate(r1) =4.5% for 15 years Interest Rate(r2) = 5% for 30 years…

Q: an for the first 5 years (i.e., first 60 monthly payments). Subseque age will become a standard…

A: For first 5 years  Loan payment=750000 interest rate =3.6% monthly interest =3.6/12=0.3% monthly…

Q: What is the annual percentage rate ( APR) of the loan?

A: The annual percentage rate is an annual interest rate used to represent the cost of borrowing. It…

Q: You want to purchase a house and are reviewing variations in how to structure the mortgage. One of…

A: Note: Replace "PMT" in the formulas with the actual PMT() calculations from Excel.Once these…

Q: Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose…

A: The monthly payment of a loan includes both the interest portion and principal portion. The interest…

Q: You have a choice between the following two identical homes: Home A is priced at $150,000 with 80…

A: Home APrice= $150,000LTV= 80%Finance rate= 10%Term= 20 yearsHome B (with the same term)Price=…

Q: Phil Pittman is interested in a fixed-rate mortgage for $400,000. He is undecided whether to choose…

A: Loan amortization is a method of scheduling loan repayments consisting of principal and interest…

Q: You have been shopping for a new home. You have the choice of financing for your $300,000. You can…

A: Principle amount is $300,000 We have two Choices:- 1st Choice:- Rate of interest is 4.5% Loan…

Q: You are considering the purchase of a condominium to use as a rental property. You estimate that you…

A: Mortgage A mortgage is an agreement between the lender and the borrower in which the lender lent…

Q: Assume you want to borrow $300,000 and have been presented with two options. The first option is a…

A: Amortization of loan is the process of repayment of loan. In the amortization of the loan. principal…

Q: You’ve decided to buy a house that is valued at $1 million. You have $250,000 to use as a down…

A: The question is based on the concept of amortization of loan in equal periodic installment.by…

Q: You are about to take a mortgage and you plan to hold it for 10 years. A lender offers you a 30-year…

A: Option (i)Period (n)= 30 years = 30 X 12 = 360 monthsPrincipal of loan (P) = $ 250,000Contract rate…

Q: Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose…

A: EMI or monthly mortgage payments are the fixed amount paid by the borrower to the lender that…

Q: You are planning to purchase a house that will require a mortgage of $400,000.  You find 2 mortgage…

A: The company is considering the value of mortgage for the purpose of financing the assets of the…

Q: A borrower is faced with choosing between two loans. Loan A is available for $76,000 at 6 percent…

A: ParticularsLoan ALoan BLoan amount$76,000.00$76,000.00Interest rate6%7%Number of…

Q: Mr. Smith is purchasing a $160000 house. The down payment is 20 % of the price of the house. He is…

A: Solution:- When an amount is borrowed, it can either be repaid as a lump sum payment or in…

Q: Suppose Bank A offers a $201,000, 20-year, 2.1% fixed rate mortgage with closing costs of $1900 plus…

A: We have to find the closing cost in the loan transaction.

Q: Alternatively, you can obtain from your bank a 30-year interest-only (IO) mortgage with an…

A: First 5 years interest only on mortgage  interest rate 3.6%monthly compounding  monthly interest…

Q: You are considering two payment options on a $500,000 20-year mortgage having an interest rate of…

A: Mortgage refers to the contract between borrower and the lender of the amount. The borrower owes…

Q: Compute the face value of a 40-year fixed-rate mortgage with a monthly payment of $1,000, assuming a…

A: The time period of the mortgage is 40 years Monthly payments are $1,000 The nominal Interest rate is…

Q: a. What are the monthly principal and interest payments for each loan? b. What is the total amount…

A: Loan Amortization: It is the process of paying the loan amount by the borrower in periodic payments…

Q: A borrower is faced with choosing between two loans. Loan A is available for $89,000 at 6 percent…

A: Interest rate refers to the cost which is associated with the loan amount that should be given by…

Q: Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose…

A: Loan amount = $200,000 15-year mortgage monthly payment = $1529.99 or $1530 (round to nearest…

Q: Robert plans to take out a mortgage for a house he just bought for $1 million. Bank A is offering a…

A: The calculation is:

Q: Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose…

A: Given,

Q: Phil Pittman is interested in a fixed-rate mortgage for $400,000. He is undecided whether to choose…

A: A mortgage is a covered loan taken out to purchase a property. The property in question acts as…

Q: Consider the following options for a $153,000 mortgage. Calculate the monthly payment and total…

A: Data given: Mortgage = $153,000 Option 1: N= 30 years Rate = 4.3% Closing cost  = $1500 and no point…

Q: Phil Pittman is interested in a fixed-rate mortgage for $400,000. He is undecided whether to choose…

A: A loan is a financial arrangement in which one or more people, companies, or other entities lend…

Q: You purchase a home costing $480,000 with a 20% down payment. After shopping around for a mortgage,…

A: Thus, Monthly Payment in option 1 is $1583.32 and in Option 2 is $1586.07

Loans

A loan is a term that we are all familiar with. The processing of loans is one of the most important functions of a bank. It keeps our economy stable and facilitates the implementation of monetary policies. Let's take a look at the different forms of loans and get some answers to some common questions.