Question

suppose you take a mortgage for $95,000 at 6.50% for 30 years, monthly payments. the loan has a 5% prepayment penalty if the loan is repaid within the first 5 years of life. if you repay the loan at the end of year 4 what is the payoff of the loan?

A- 0 B- 4,515 C- 90,307 D-156,250

You to refinance your current mortgage that has a current balance of $150,000 and does not have a prepayment penalty. Your lender will charge 4% financing costs on the new loan and you wish to have no out-of-pocket expenses at closing. How must you borrow on the new loan?

A-0 B- 150,000 c- 156,000 D- 156,250

Answer 1

1.
=(95000*(1+6.5%/12)^(12*4)-95000*(6.5%/12)/(1-1/(1+6.5%/12)^(12*30))*1/(6.5%/12)*((1+6.5%/12)^(12*4)-1))
=90306.59387

2.
=Current Balance/(1-%financing cost)
=150000/(1-4%)
=156250