Question

Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75% and monthly payments. The reset margin on the loan is 300 basis points above 1 year CMT. The index was 1% at the time of origination. Tim also had to pay 3 points for this loan. Suppose the index rate will remain 1% for the life of the loan. Compute the true APR for this loan.

Answer #1

Tim
wants to buy an apartment that costs $750,000 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 s 300 basis points above 1 year
CMT. The index was 1% at the time of origination. Tim also had to
pay 3 points ifor this loan. Suppose the index rate will remain 1%
for the life of the loan. Compute the true APR for this...

Tim wants to buy an apartment that costs $750,000 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. Tim anticipates the index to be 3.50% at the time
of the 1st reset. Tim’s monthly mortgage payment is going to be
$2952.36190 during the 1st 3 years. If the index resets to 3.50% as
Tim forecasts, what...

4. An ARM for $200,000 is made at a
time when the expected start rate is four percent (4%). The loan
will be made with a teaser rate of one percent (1%) for the first
year, after which the rate will be reset. The loan is fully
amortizing, has a maturity of 25 years, and payments will be made
monthly.
a. What will be the monthly payments
during the first year?
b. Assuming that the reset rate is
three percent...

Marc wishes to buy a $500,000 home using Loan 1 (mortgage rate:
10.60%, maturity: 30 years, origination fee: 4 points, prepayment
penalty: 2%) with loan to value of 80% or using Loan 2 (mortgage
rate: 9.60%, maturity: 30 years, origination fee: 3 points,
prepayment penalty: 2%) with loan to value of 70%.The borrower
plans to be in the home for 5 years. Alternative investments of
similar risk can provide 19.00% IRR and borrowing from alternative
sources (than mortgage) would cost...

Suppose a home buyer took out a 75% LTV loan 9 years ago to
purchase a $190,000 home at a fixed interest rate of 8% amortized
over 30 years with monthly payments. This loan had 3 discount
points, a 1% origination fee, and a 4% prepayment penalty
associated with it. The owner is thinking about refinancing and has
decided to pay any costs incurred in the process out of his pocket.
The loan-to-value ratio on the new loan is not...

You need a 25-year, fixed-rate mortgage to buy a new home for
$190,000. Your mortgage bank will lend you the money at a 9.1
percent APR for this 300-month loan. However, you can afford
monthly payments of only $800, so you offer to pay off any
remaining loan balance at the end of the loan in the form of a
single balloon payment.
How large will this balloon payment have to be for you to keep
your monthly payments at...

You need a 25-year, fixed-rate mortgage to buy a new home for
$240,000. Your mortgage bank will lend you the money at a 6.1
percent APR for this 300-month loan. However, you can afford
monthly payments of only $800, so you offer to pay off any
remaining loan balance at the end of the loan in the form of a
single balloon payment.
Required: How large will this balloon payment have to be for you
to keep your monthly payments...

You need a 25-year, fixed-rate mortgage to buy a new home for
$250,000. Your mortgage bank will lend you the money at a 7.1
percent APR for this 300-month loan. However, you can afford
monthly payments of only $900, so you offer to pay off any
remaining loan balance at the end of the loan in the form of a
single balloon payment.
Required:
How large will this balloon payment have to be for you to keep
your monthly payments...

Assume that a lender offers a 30-year, $150,000 adjustable rate
mortgage (ARM) with the following terms: Initial interest rate 7.5
percent Index one-year Treasuries Payments reset each year Margin 2
percent Interest rate cap 1 percent annually; 3 percent lifetime
Discount points 2 percent Fully amortizing; however, negative
amortization allowed if interest rate caps reached Based on
estimated forward rates, the index to which the ARM is tied is
forecasted as follows: Beginning of year (BOY) 2 7 percent; (BOY)...

you borrowed $500,000 to buy a house. The mortgage rate s 24%
(APR, monthly). The loan is to be repaid in equal monthly payments
over 30 years. 29 years has passed. How much you owe to the bank on
your home (loan principal) since you have 1 year left from your
mortgage? Assume that each month is equal to 1/12 of a year.

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