Question

Please calculate the expected prepayment for month 100. Ounstading Month 100 Balance  231,249,776 Mortage SMM .00514 Net...

Please calculate the expected prepayment for month 100.

Ounstading Month 100

Balance  231,249,776

Mortage SMM .00514

Net Payment 1,898,682

Scheduled Interest 1,445,311

Principal 332,928

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Answer #1

As per the given data we have to calculate the prepayment for month100 by using SMM model which is given by

SMM=prepaid principal for momth t ÷(outstanding loan balance at the beginning of month t - scheduled principal payment)

Where :

Month t=100

Prepaid principal =prepayment

Outstanding balance at the beginning of month100= dollars 231249776

Scheduled principal payment =332928

SMM=.00514

HENCE

.00514=prepayment ÷(231249776-332928)

Thus prepayment =1186912.6

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