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For the following fixed-rate, level-payment mortgage: maturity = 15 years, amount borrowed = 90% of the...

For the following fixed-rate, level-payment mortgage: maturity = 15 years, amount borrowed = 90% of the appraised home value, appraised home value = $500,000, and annual note rate = 6%

(a) Construct an amortization schedule for the first 3 months.

(b) What will the mortgage balance be at the end of the 15^th year assuming no prepayments?

(c) Without constructing an amortization schedule, what is the mortgage balance at the end of the 7^th year assuming no prepayments?

(d) What is the loan to value ratio (LTV, stated as a percentage) for this mortgage at the end of the 3^rd month?

Expert Solution

(a) Construct an amortization schedule for the first 3 months.

Provided in Image

(b) What will the mortgage balance be at the end of the 15^th year assuming no prepayments?

Mortgage Balance after 15 years will be equal to Zero

(c) Without constructing an amortization schedule, what is the mortgage balance at the end of the 7^th year assuming no prepayments?

Mortgage Balance after 7 years = $288960.61

(d) What is the loan to value ratio (LTV, stated as a percentage) for this mortgage at the end of the 3^rd month?

LTV ratio at the end of month 3 = Loan O/s / Appraised Value

LTV ratio at the end of month 3 = 445334.68 / 500000

LTV ratio at the end of month 3 = 89.07%

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jeff jeffy answered 1 year ago

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