You are looking to purchase a new home. You are talking to a lender about a...

You are looking to purchase a new home. You are talking to a lender about a 5.000% interest rate loan for 30 years that amortizes monthly.

For 30 years and 5% the constant annual rate is 6.442%

What is your mortgage constant?

How to enter your answer? Let's say your calculated answer is 0.02759. That is the same thing as 2.759% so you should enter 2.759 as your final answer. Decimals matter for mortgage constants, interest rates, and cap rates, so don't round this example to 2.8. You need to keep at east two decimal places.

Solutions

Expert Solution

We see that the mortgage constant is given as=(5%/12)/(1-1/(1+5%/12)^(12*30))
=0.5368%
=0.5368

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

You are looking to purchase a new home. You are talking to a lender about a...

You are looking to purchase a new home. You are talking to a lender about a 3.625% interest rate loan for 30 years that amortizes monthly. What is your mortgage constant? How to enter your answer? Let's say your calculated answer is 0.02759. That is the same thing as 2.759% so you should enter 2.759 as your final answer. Decimals matter for mortgage constants, interest rates, and cap rates, so don't round this example to 2.8. You need to keep...

Assume you are talking with someone at work or home about the three components of credibility:...

Assume you are talking with someone at work or home about the three components of credibility: competence, caring, and character. Express how you would describe these three components to someone using your own words.

You are purchasing a new home and need to borrow $325,000 from a mortgage lender. The...

You are purchasing a new home and need to borrow $325,000 from a mortgage lender. The lender quotes a rate of 6.5% APR for a 30-year fixed rate mortgage (with payments made at the end of each month). The lender offers you the option to "buy down" the interest rate. If you pay 1 point, the interest rate will be reduced to 6.25% APR for a 30year fixed rate mortgage. One point is equal to 1% of the loan value....

You are about to buy a home; the purchase price of the car is $200,000 and...

You are about to buy a home; the purchase price of the car is $200,000 and you are paying 10% of that amount as a down payment and financing the remainder. Your mortgage loan terms are 30 years of monthly payments at an annual rate of 3.25%. How much are your monthly mortgage payments? Over the life of the loan, how much did you pay in interest a) Suppose on January 1 you deposit $2,750 in an account that pays...

A couple is looking to purchase their first home. The house is for sale at $125,000....

A couple is looking to purchase their first home. The house is for sale at $125,000. They can obtain an 80% LTV with a 7% interest rate and monthly payments. The loan is to be fully amortized over 30 years. Alternatively, they could obtain a 90% LTV at a 7.5% interest rate amortized over the same term. What is the incremental cost of borrowing the additional funds? Assuming the couple took the 80% loan, after fifteen years, the couple has...

You are looking to purchase your first home and have picked one out. The house costs...

You are looking to purchase your first home and have picked one out. The house costs $287,000.00, and you saved up 8% in cash and you will need to get a loan/mortgage for the remainder of the purchase price. You also need to get private mortgage insurance, which will cover 25% of your loan amount in the event of default. The PMI involves a 3.5% of loan premium due at closing, which will be added to the loan balance. The...

1. You apply for a home equity loan. The lender gets an appraisal on your home,...

1. You apply for a home equity loan. The lender gets an appraisal on your home, showing a value of $183,500. You have a first mortgage with a current balance of $87,435. Based on a 75% LTV ratio, what is the maximum line of credit you can get? 2. Assume you buy 100 shares of stock at a price of $63.75 per share and incur brokerage fees of $200. You own the stock for 5 years and receive dividends of...

A man is looking to purchase a home in the Cleveland Suburbs. He has enough for...

A man is looking to purchase a home in the Cleveland Suburbs. He has enough for a 20% down payment and an income of $70,000 per year. His FICO Score is 660. The prime Interest Rate for 30-year Mortgages is 5%. He has a car payment of $400 per month and a Student Loan Payment of $200 per month. The home he finds has 70 Effective Property Tax Mills and Homeowner’s Insurance Costs $50 per month on every $100,000 of...

1. You are buying a new home with a purchase price of $189,500. You have a...

1. You are buying a new home with a purchase price of $189,500. You have a cash down payment of $18,950 and are financing the remaining amount at an interest rate of 4.5% for 30 years. Provide the following Principal amount to be repaid? Payment amount per month for 30 years Total interest paid over 30 years? 2. Now suppose that you have financed the new house in problem #1 for 30 years. After 10 years into the Mortgage...

You are looking to purchase a new car with the assistance of a $22,000, five-year loan...

You are looking to purchase a new car with the assistance of a $22,000, five-year loan at an APR of 5.4%, compounded monthly. Required: a. What is the monthly payment on this loan? b. What is the amount of interest and principal on the loan’s first monthly payment? c. What is the amount of interest and principal on the loan’s sixteenth monthly payment? d. Show a second method to determine the amount of interest and principal on the loan’s sixteenth...

Subjects