Question
In: Finance
A borrower takes out a 30-year price level adjusted mortgage loan for $200,000 with monthly payments....
A borrower takes out a 30-year price level adjusted mortgage loan for $200,000 with monthly payments. The initial interest rate is 4% with 4 points. Assuming that inflation is expected to increase at the rate of 3% for the next 5 years, and a fully amortizing loan is made.
a) What is the monthly payment in year 2?
b) What is the expected effective yield to the lender if the loan is repaid in 2 years?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The...
A borrower takes out a 30-year adjustable rate mortgage loan for
$200,000 with monthly payments. The first two years of the loan
have a "teaser" rate of 2%, after that, the rate can reset with a
7% annual payment cap. On the reset date, the composite rate is 6%.
Assume that the loan allows for negative amortization. What would
be the outstanding balance on the loan at the end of Year 3?
A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The...
A borrower takes out a 30-year adjustable rate mortgage loan for
$200,000 with monthly payments. The first two years of the loan
have a “teaser” rate of 4%, after that, the rate can reset with a
5% annual payment cap. On the reset date, the composite
rate is 6%. What would the Year 3 monthly payment be? with the way
please.
A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The...
A borrower takes out a 30-year adjustable rate mortgage loan
for $200,000 with monthly payments. The first two years of the loan
have a “teaser” rate of 4%, after that, the rate can reset with a
5% annual payment cap. On the reset date, the composite
rate is 6%. What would the Year 3 monthly payment be?
$955
$1,003
$1,067
$1,186
Because of the payment cap, the payment would not change.
A borrower takes out a 30-year adjustable rate mortgage loan for $325,000 with monthly payments.
A borrower takes out a 30-year adjustable rate mortgage loan for
$325,000 with monthly payments. The first two years of the loan
have a "teaser" rate of 4%, after that, the rate can reset with a
5% annual payment cap. On the reset date, the composite rate is 6%.
Assume that the loan allows for negative amortization. What would
be the outstanding balance on the loan at the end of Year 3?
A borrower takes out a 30-year adjustable rate mortgage loan for $400,000 with monthly payments. The...
A borrower takes out a 30-year adjustable rate mortgage loan for
$400,000 with monthly payments. The first two years of the loan
have a “teaser” rate of 4%, after that, the rate can reset with a
2% annual rate cap. On the reset date, the composite rate is 5%.
What would the Year 3 monthly payment be?
. A borrower takes out a 30 - year adjustable rate mortgage loan for $200,000 with...
. A borrower takes out a 30 - year adjustable rate mortgage loan
for $200,000 with monthly payments. The first two years of the loan
have a “teaser” rate of 4%, after that, the rate can reset with a
2% annual rate cap. On the reset date, the composite rate is 5%.
What would the Year 3 monthly payment be?
(A) $955
(B) $1,067
(C) $1,071
(D) $1,186
(E) Because of the rate cap, the payment would not change.
A borrower takes out a 15-year adjustable rate mortgage loan for $560,000 with monthly payments. The...
A borrower takes out a 15-year adjustable rate mortgage loan for
$560,000 with monthly payments. The first 4 years of the loan have
a “teaser” rate of 5%, after that, the rate can reset with a 5%
annual payment cap. On the reset date, the composite rate is 9%.
What would the Year 5 (after 4 years; 11 years left) monthly
payment be?
A borrower takes out a 15-year adjustable rate mortgage loan for $550,000 with monthly payments. The...
A borrower takes out a 15-year adjustable rate mortgage loan for
$550,000 with monthly payments. The first 5 years of the loan have
a “teaser” rate of 4%, after that, the rate can reset with a 5%
annual payment cap. On the reset date, the composite rate is 7%.
What would the Year 6 (after 5 years; 10 years left) monthly
payment be?
A borrower takes out a 25-year adjustable rate mortgage loan for $446,242 with monthly payments. The...
A borrower takes out a 25-year adjustable rate mortgage loan for
$446,242 with monthly payments. The first two years of the loan
have a "teaser" rate of 4%, after that, the rate can reset with a
2% annual rate cap. On the reset date, the composite rate
is 5%. What would the Year 3 monthly payment be?
A borrower takes out a 28-year adjustable rate mortgage loan for $451,185 with monthly payments. The...
A borrower takes out a 28-year adjustable rate mortgage loan for
$451,185 with monthly payments. The first two years of the loan
have a "teaser" rate of 4%; after that, the rate can reset with a
2% annual rate cap. On the reset date, the composite rate is 5%.
What would the Year 3 monthly payment be?
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