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A bank offers 25-year, $215,000 mortgages at 5.4 percent and charges a $4,400 refundable loan application...

A bank offers 25-year, $215,000 mortgages at 5.4 percent and charges a $4,400 refundable loan application fee. The current disclosure law requires that any fees that will be refunded if the applicant is rejected be included in calculating the APR. What is the APR that they are required to disclose?

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Answer #1

Yearly mortgage payment= $15,872.04 calculated using the PMT function of Excel.

APR to be disclosed= 5.61% calculated using RATE function of Excel.

Calculations as below:

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