Question

In: Finance

Typically, if investors expect to stay in the house or will pay off the loan in...

Typically, if investors expect to stay in the house or will pay off the loan in the near future (say, in less than 5 years), should they pay the discount points in exchange for lower monthly payments? (Hint: see the real world application example that we went through in class)

A. Yes, they should pay the discount points

B. No, they should not pay the discount points

19. During the early years of an amortizing mortgage loan, the lender applies

A. Most of the monthly payment to the outstanding principal balance.

B. All of the monthly payment to the outstanding principal balance.

C. Most of the monthly payment to interest on the loan.

D. All of the monthly payment to interest on the loan.

E. The monthly payment equally to interest on the loan and the outstanding principal balance.

What is loan servicing?

A-Loan servicing is the process of the lender making a loan to a borrower. This term

is only used in regards to mortgages.

B-Loan servicers are the people in an investment bank who packaged together many

mortgages into an MBS for selling to investors.

C-Loan servicers did the pre-qualifying of potential borrowers as commercial banks

could not keep up with the demand.

D-Loan servicers collect monthly payments and manage the paper work associated

with a loan, usually keeping a portion of the payments received.

Expert Solution

jeff jeffy answered 2 years ago

You take out a loan for 10000. You pay off the loan with monthly payments of...

You take out a loan for 10000. You pay off the loan with monthly payments of 90 for 10 years. (a) What is the monthly effective rate? What is the annual effective rate? (b) What is the outstanding loan balance immediately after the 7th payment? Calculate using both the retrospective and prospective formulas. (c) Assume you miss the 13th and 53rd payments, what will be the outstanding loan balance after the 71st payment? actuarial science

How long will it take to pay off a loan of $54,000 at an annual rate...

How long will it take to pay off a loan of $54,000 at an annual rate of 11 percent compounded monthly if you make monthly payments of $750? Use five decimal places for the monthly percentage rate in your calculations.

How long will it take to pay off a loan of $52,000 at an annual rate...

How long will it take to pay off a loan of $52,000 at an annual rate of 12 percent compounded monthly if you make monthly payments of $750? Use five decimal places for the monthly percentage rate in your calculations. The number of years it takes to pay off the loan is ____ years. (Round to one decimal place.)

To pay off a loan of $8,900 due in five years, a person will make a...

To pay off a loan of $8,900 due in five years, a person will make a deposit at the end of each year into an account paying 9.3% interest compounded annually. Determine the size of the deposit rounded up to the nearest half-dollar and construct a table that shows the size of each deposit, the amount of interest, and the balance after each payment.

How long will it take to pay off a loan of $45,000 at an annual rate...

How long will it take to pay off a loan of $45,000 at an annual rate of 8 percent compounded monthly if you make monthly payments of $600? Use five decimal places for the monthly percentage rate in your calculations.

If you pay off a loan early, you must also pay all the remaining interest payments...

If you pay off a loan early, you must also pay all the remaining interest payments along with the loan balance. Group of answer choices True False. Which of the following is correct? Group of answer choices Present values increase with a longer compounding period. Present values increase with a higher interest rate. Future values increase with a lower interest rate. Future values increase with a longer compounding period. 3. What does it mean when you see the message Error...

A share of stock with a beta of 0.76 now sells for $51. Investors expect the stock to pay a year-...

A share of stock with a beta of 0.76 now sells for $51. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 3%, and the market risk premium is 7%. a. Suppose investors believe the stock will sell for $53 at year-end. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do? (Do not round intermediate calculations. Round your opportunity cost of capital calculation as a whole...

25. The annual payment necessary to amortize (pay off) a 5% $200,000 loan with a 20...

25. The annual payment necessary to amortize (pay off) a 5% $200,000 loan with a 20 year repayment period (annual end of year payments required) is __________________ 26. A prospective new creditor (a vendor for materials purchases) is evaluating financial ratios for ABC Company. The creditor is likely most interested in the __________ ratios a. inventory management related b. return on equity related c. return on assets related d. liquidity related 27. ABC Inc. signs a note payable in the...

Jim plans to pay off a $450,000 loan in 15 years. To achieve this goal, he...

Jim plans to pay off a $450,000 loan in 15 years. To achieve this goal, he makes equal payments at the end of each fortnight based on an annual nominal interest rate of r^(26) = 4.5%. (a) Show that the size of these fortnightly payments is $1,587.71. (b)At the end of four years, Jim takes a mortgage holiday for six months. How much will his fortnightly payments now change by so he can still pay off the loan in the...

Build a amortization table for the loan below add extra payment to pay off early by...

Build a amortization table for the loan below add extra payment to pay off early by no more the 6 months (the loan payment must last 4.5 years even with early payoff) . Show the money saved. $35,000 loan, 5 years, 5.9% interest, monthly payments with no balloon. Create an annuity solution to find the payment in Excel (that's the N I/Y PV PMT FV) and then do the amortization table for it.