Question

In: Advanced Math

A house can be purchased for ​$155 comma 000155,000​, and you have ​$25 comma 00025,000 cash...

A house can be purchased for

​$155 comma 000155,000​,

and you have

​$25 comma 00025,000

cash for a down payment. You are considering the following two financing​ options:

bullet•

Option​ 1. Getting a new standard mortgage with a

7.57.5​%

​(APR) interest and a

3030​-year

term.

bullet•

Option​ 2. Assuming the​ seller's old​ mortgage, which has an interest rate of

5.55.5​%

​(APR), a remaining term of

2525

years​ (the original term was

3030

​years), a remaining balance of

​$97 comma 21797,217​,

and payments of

​$597597

per month. You can obtain a second mortgage for the remaining balance

​($32 comma 78332,783​)

from your credit union at

99​%

​(APR) with a

1010​-year

repayment period.

​(a) What is the effective interest rate of the combined​ mortgage?

The effective interest rate of the combined mortgage is

nothing​%.

Solutions

Expert Solution

Colby Messinger answered 5 months ago
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