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 1 month ago

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

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Expert Solution

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