You have two options for a 30 year fixed rate mortgage: $500,000 mortgage, 5% rate $500,000...

You have two options for a 30 year fixed rate mortgage:

$500,000 mortgage, 5% rate

$500,000 mortgage, 4.50% rate, 2 discount points

For how long must the mortgage remain in effect for you to choose the lower rate and pay the discount points

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 1 year ago

You need a 30-year, fixed-rate mortgage to buy a new home for$500,000. You will pay...

You need a 30-year, fixed-rate mortgage to buy a new home for $500,000. You will pay 20 percent down and borrow the rest at an APR of 6 percent compounded monthly. However, you can only make monthly payments of $1,800. The lender offers that you pay off the remaining loan balance at the end of 30 years as a single balloon payment. What will be the amount of the balloon payment if you are to keep your monthly payments at...

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)...

You are considering two payment options on a $500,000 20-year mortgage having an interest rate of...

You are considering two payment options on a $500,000 20-year mortgage having an interest rate of 2.8% compounded monthly. The first option is to make monthly payments at the start of each month, while the second option is to make payments at the end of each month. How much interest will be saved by choosing the first option ?

You currently have a 30-year fixed rate mortgage with an annual interest rate of 6%. You...

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) into a...

Randi can get: a fully amortizing 30 year fixed rate mortgage with monthly payments for $500,000...

Randi can get: a fully amortizing 30 year fixed rate mortgage with monthly payments for $500,000 at an annual interest rate of 9%, compounded monthly. Or a fully amortizing 15 year fixed rate mortgage with monthly payments for $500,000 at an annual interest rate of r, compounded monthly. What does the interest rate on the 15 year fixed rate mortgage need to be so that Randi s payment on the 15 year fixed rate mortgage is the same as the...

Robert and Rebecca Richardson have just signed a 30-year, 5% fixed-rate mortgage for $280,000 to buy...

Robert and Rebecca Richardson have just signed a 30-year, 5% fixed-rate mortgage for $280,000 to buy their house. Find out this couple's monthly mortgage payment by preparing a loan amortization schedule for the Richardson’s for the first 2 months; find out how much of their payments applied to interest; and after 2 payments, how much of their principal will be reduced. (Please construct a loan amortization schedule and show your calculations).

a homeowner can obtain a 500,000 thirty year fixed rate mortgage at a rate of 3.0%...

a homeowner can obtain a 500,000 thirty year fixed rate mortgage at a rate of 3.0% with zero points or at a rate of 2.75% with 2 points. if you will keep the mortgage for 30 years what is the net present value of paying the points to the nearest dollars 1.)9,475 2.)8,360 3.) 6,366 4.)7,616 5.) 5,240

you have two mortgage options the first is a 180000 mortgage payable over 30 years with...

you have two mortgage options the first is a 180000 mortgage payable over 30 years with apr of 11 the other mortgage is of x also payable over 30 years with apr 13% the yearly mortgage payment of this option is 7312more than the first what's the mortgage offered by the second

You are buying a $350,000 home and are deciding between two fixed rate mortgage options. The...

You are buying a $350,000 home and are deciding between two fixed rate mortgage options. The 80% LTV option has an interest rate of 6% over 30 years. The 90% LTV option has an interest rate of 6.5% over 30 years with 2 discount points. What is the incremental borrowing cost when choosing the 90% LTV option over the 80% LTV option? Why is the effective borrowing cost higher for the 90% LTV option?

What is the monthly mortgage payment on a $300,000 30 year fixed rate mortgage with an...

What is the monthly mortgage payment on a $300,000 30 year fixed rate mortgage with an interest rate of 5.125 percent. A friend who knows you have studied amortization asks your help to find the interest portion of their house payments for tax purposes (assuming they itemize). The monthly payments are $2,107.02 on a 30 year loan with a 5 percent interest rate. a) What was the total amount of interest paid during year 2? b) At what point in...

Question