Question

In: Finance

Assume a 30-year, $600,000, 6% mortgage with annual payments. 16. Assume the first payment beginning in...

Assume a 30-year, $600,000, 6% mortgage with annual payments.
16. Assume the first payment beginning in exactly one year, what is the annual payment?
17. What is the outstanding mortgage balance after you have made 10 payments?
18. If the loan calls for monthly payments, what is the monthly payment?

Assume you have a 6% 30-year mortgage for $100,000 with now 10 years to maturity (annual payments with exactly one year to the next payment). You are considering a refinance of the loan at 4% with a refinancing fee of $4,000. 19. What is the remaining loan balance?
20. What is the new payment, if you choose to refinance. Is refinancing with the new rate (4%) a good idea?

Expert Solution

We can solve these problems using excel formulae

16: Annual payment using PMT formula in excel = $43,589.35

17:

Principal paid off in 10 payments using CUMPRINC formula

-100033.63

Balance remaining = Original loan- principal paid

= 600000-100033.63

= 499966.37

18: Monthly payments = $3,597.30

19: Principal paid off in 20 payments using CUMPRINC formula = -279178.61

Balance remaining = Original loan- principal paid

= 600000 -279178.61

= 320821.39

20 New payment will be computed using a rate of 4%, term = 10 years and Principal PV = 320821.39+4000 refinancing fees.

New payments = $40,047.54

WORKINGS

jeff jeffy answered 1 year ago

The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 6% per year. What will be your annual payment if you sign this mortgage?

You are thinking of purchasing a house. The house costs $250,000. You have $36,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price.The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 6% per year. What will be your annual payment if you sign this mortgage?

Consider a 6%, 30 year, $200,000 level payment mortgage with a monthly payment of $1,199.10. Assume...

Consider a 6%, 30 year, $200,000 level payment mortgage with a monthly payment of $1,199.10. Assume up front financing cost (includes all costs paid to the lender and third parties except discount points) equal $3,000. Find the EBC if the borrower repays the loan after two years (assuming no direct points). What is the EBC if the lender charges one discount point? What is the EBC if the lender charges 2.5 discount point?

A 30-year mortgage for $220,000 has monthly payments at a 6% nominal annual rate. If a...

A 30-year mortgage for $220,000 has monthly payments at a 6% nominal annual rate. If a borrower’s loan origination fee is 3% and is added to the initial balance, what is the true effective cost of the loan? (8 pts) If the house is sold after six years and the loan is paid off, what is the effective interest rate? (4 pts) Graph the effective interest rate as the time to sell the house and pay off the loan varies...

Assume you are to receive a 10-year annuity with annual payments of $800. The first payment...

Assume you are to receive a 10-year annuity with annual payments of $800. The first payment will be received at the end of year 1, and the last payment will be received at the end of year 10. You will invest each payment in an account that pays 7 percent compounded annually. Although the annuity payments stop at the end of year 10, you will not with draw any money from the account until 20 years from today, and the...

6. Assume the annual interest rate on a $500,000 7-year balloon mortgage is 6 percent. Payments...

6. Assume the annual interest rate on a $500,000 7-year balloon mortgage is 6 percent. Payments will be made monthly based on a 30-year amortization schedule. f. What will be the remaining mortgage balance on the new 4.5 percent loan at the end of year 7 (four years after refinancing)? g. What will be the difference in the remaining mortgage balances at the end of year 7 (four years after refinancing)? h. At the end of year 3 (beginning of...

1.(Level-Payment Mortgages) Compute the monthly payment on a 30-year level payment mortgage assuming an annual mortgage...

1.(Level-Payment Mortgages) Compute the monthly payment on a 30-year level payment mortgage assuming an annual mortgage rate of 5% and an initial mortgage principal of $400,000. (2147.29) 2.(Mortgage Pass-Throughs) Consider a $400 million pass-through MBS that has just been created (so the 'seasoning' of the pass-through is equal to 0). The underlying pool of mortgages each has a maturity of 20 years and an annual mortgage coupon rate of 6%. The pass-through rate of the mortgage pool is 5%. Assuming...

Assume the payments will be made at the end of each year (The first payment is...

Assume the payments will be made at the end of each year (The first payment is made on December 31, 2019.); recalculate your answer for case # 3. Calculate the annual payment required. Show your final answer and show all the work to support your answer. Prepare the amortization table for the loan using the format covered in class. Case #3 info: On January 1, 2019, ABC Corp. borrowed $81,000 by signing an installment loan. The loan will be repaid in 20...

Mortgage Payment You currently have a 30-year fixed rate mortgage with an annual interest rate of...

Mortgage Payment You currently have a 30-year fixed rate mortgage with an annual interest rate of 6%. You have had the mortgage 4 years, and on September 1, 2015 you made your 48th payment. The original principal amount was $280,000 and you monthly payment, without taxes and insurance, are $1,678.74 per month, computed using the Excel function =PMT(0.5%,360,280000,0,0). Starting with your original mortgage your banker calls and says that you could refinance your existing mortgage (6% rate, 30-year original term)...

What is the monthly payment for a $800,000 mortgage for the first 119 payments that is...

What is the monthly payment for a $800,000 mortgage for the first 119 payments that is due in 10 years, has a 25 year amortization, at 5% interest? What is the amount of the 120th payment? Please use Excel and explain. Make sure that formulas are set to show in excel sheet.

You borrow a GPM (graduate payment mortgage) of $10,000 with annual payments and 3-year term. The...

You borrow a GPM (graduate payment mortgage) of $10,000 with annual payments and 3-year term. The interest rate is 10% with $100 origination cost. The payment factors from year 1 to year 3 are as follows: 25%, 50% and 100% What is the annual payment in the 1st year? $1,796.22 $3,592.44 $7,184.89 $1,005.29 What is the effective cost of this loan if you holding the loan for 3 years? 10.47% 10.27% 10.67% None of the above