Question

You bought a house 17 months ago for $300,000. You put 5% down and therefore took out a mortgage of $285,000. Your interest rate is 3.5% per year (expressed as an annual percentage rate), compounded monthly, and your mortgage lasts 30 years. You have made 17 payments thus far. However, you are worried that the coronavirus outbreak may cause home prices to decline in your area. If your home price declines by 8%, is your home underwater on the loan? In other words, is your home worth less than what you owe on the mortgage?

Answer #1

You bought a house for 150,000. The bank required a
20% down payment and gave you a 30-year mortgage loan for the
remainder. Assume an annual interest rate of 3.5% and a
monthly repayment schedule. What is your monthly
payment? After 18 years of payments, how much do you
still owe?

28- You bought a house 2 years ago. To finance the purchase,
you took out a mortgage for $775,000. The interest rate on the
mortgage is 8%
and the amortization period is 25 years. You chose to make
26
payments per year and each payment is
$2,725.15.
Your last payment was yesterday. How much principal remains
owing today?

You have been living in the house you bought 7 years ago for
$300,000. At that time, you took out a loan for 80% of the house at
a fixed rate 15-year loan at an annual stated rate of 7.5%. You
have just paid off the 84th monthly payment. Interest rates have
meanwhile dropped steadily to 5.0% per year, and you think it is
finally time to refinance the remaining balance over the residual
loan life. But there is a...

You bought your house five years ago and you believe you will be
in the house only about five more years before it gets too small
for your family. Your original home value when you bought it was
$250,000, you paid 20 percent down, and you financed closing costs
equal to 3 percent of the mortgage amount. The mortgage was a
30-year fixed-rate mortgage with a 6.5 percent annual interest
rate. Rates on 30-year mortgages are now at 5 percent...

2. Suppose you bought a house for $200,000
financing it with a $40,000 down payment of your own funds and a
$200,000 mortgage loan from a bank. (12 points)
a. Assume that the market value of your house has
now risen to $230,000. Ignoring interest and other costs, and
assuming the loan amount is still $160,000, calculate your rate of
return on your asset (ROA) and your rate of return on equity
(ROE).
b. Now assume that, instead...

suppose that 10
years ago you bought a home for 120,000, paying 10% as a down
payment, and financing the rest at 9% interest for 30 years.
this year (10 years after you first took at the loan) you
check your loan balance. only part of your payments have been going
to pay fown the loan; the rest has been going towards interest. you
see that you still have 96,584 left to pay on your loan. your house
is now...

One year ago you bought a $1,000,000 house partly funded using a
mortgage loan. The loan size was $800,000 and the other $200,000
was your wealth or 'equity' in the house asset. The interest rate
on the home loan was 4% pa. Over the year, the house produced a net
rental yield of 2% pa and a capital gain of 2.5% pa. Assume that
all cash flows (interest payments and net rental payments) were
paid and received at the end...

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