An investor obtained a fully amortizing mortgage five years ago for $95,000 at 11 percent for 30 years. Mortgage rates have dropped, so that a fully amortizing 25-year loan can be obtained at 10 percent. There is no prepayment penalty on the mortgage balance of the original loan, but 3 points will be charged on the new loan and other closing costs will be $2,000. All payments are monthly. Assume that the investor borrows only an amount equal to the outstanding balance of the loan. Required: a. Should the borrower refinance if he plans to own the property for the remaining loan term? b. Should the borrower refinance if he planned to own the property for only five more years?
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- Your mortgage has 21 years left, and has an APR of 8.707% with monthly payments of $1,449. a. What is the outstanding balance? b. Suppose you cannot make the mortgage payment and you are in danger of losing your house to foreclosure. The bank has offered to renegotiate your loan. The bank expects to get $125,507 for the house if it forecloses. They will lower your payment as long as they will receive at least this amount (in present value terms). If current 21-year mortgage interest rates have dropped to 5.660% (APR), what is the lowest monthly payment you could make for the remaining life of your loan that would be attractive to the bank? a. What is the outstanding balance? The outstanding balance is $ (Round to the nearest cent.)An investor obtained a fully amortizing mortgage five years ago for $95,000 at 11 percent for 30 years. Mortgage rates have dropped, so that a fully amortizing 25-year loan can be obtained at 9.8 percent. There is no prepayment penalty on the mortgage balance of the original loan, but three points will be charged on the new loan and other closing costs will be $2,000. All payments are monthly. Assume that the investor borrows only an amount equal to the outstanding balance of the loan.. What is the loan balance at the end of year 5? a. $87,691.09 b. $101,537.05 c. $92,306.41 d. $92,000.00Your mortgage has 22 years left, and has an APR of 9.535% with monthly payments of $1,449. a. What is the outstanding balance? b. Suppose you cannot make the mortgage payment and you are in danger of losing your house to foreclosure. The bank has offered to renegotiate your loan. The bank expects to get $119,799 for the house if it forecloses. They will lower your payment as long as they will receive at least this amount (in present value terms). If current 22-year mortgage interest rates have dropped to 6.198% (APR), what is the lowest monthly payment you could make for the remaining life of your loan that would be attractive to the bank?
- An investor obtained a fully amortizing mortgage 5 years ago for $95,000 at 11 percent for 30 years. Mortgage rates have dropped so that a fully amortizing 25-year loan can be obtained at 10 percent. There is no prepayment penalty on the mortgage balance of the original loan, but three points will be charged on the new loan and other closing costs will be $2,000. All payments are monthly.a. Should the borrower refinance if he plans to own the property for the remaining loan term? Assume that the investor borrows only an amount equal to the outstanding balance of the loan.b. Would your answer to part (a) change if he planned to own the property for only five more years?Your mortgage has 24 years left, and has an APR of 6.303% with monthly payments of $1,449. a. What is the outstanding balance? b. Suppose you cannot make the mortgage payment and you are in danger of losing your house to foreclosure. The bank has offered to renegotiate your loan. The bank expects to get $161,182 for the house if it forecloses. They will lower your payment as long as they will receive at least this amount (in present value terms). If current 24-year mortgage interest rates have dropped to 4.097% (APR), what is the lowest monthly payment you could make for the remaining life of your loan that would be attractive to the bank? a. What is the outstanding balance? The outstanding balance is $______________ (Round to the nearest cent.) b. Suppose you cannot make the mortgage payment and you are in danger of losing your house to foreclosure. The bank has offered to renegotiate your loan. The bank expects to get $161,182 for the house if it forecloses.…A 30-year fully amortizing mortgage loan was made 10 years ago for $82,000 at 6 percent interest. The borrower would like to prepay the mortgage balance by $11,400. Required: a. Assuming he can reduce his monthly mortgage payments, what is the new mortgage payment? b. Assuming the loan maturity is shortened and using the original monthly payments, what is the new loan maturity?
- Consider the following. Two mortgages are available for $500,000.00. Both are paid monthly, compounded quarterly have terms of 5 years and are amortized over 25 years. One has an interest rate of 3% however prohibits any prepayment, the other has an interest rate of 3.1% and allows for prepayment of 10% of the balance per year. If the borrower expects to make a lump sum payment at the end of each year of $400.00 which mortgage costs the least interest by the end of the term?The Mrtinezes are planning to refinanace their home (assuming that there are no additional finance charges). The outstanding balance on their original loan is $100,000. Their finance company has offerend them two options: option a: A fixed rate mortage at an interest rate of 6.5%per year compounded monthly, payable over a 25 year period in 300 equal monthly installments. option b: A fixed rate mortgage an interest rate of 6.25% per year compounded monthly, payable over a 15 year period in 180 equal montly installments. a)find the monthly payment required to amortize each of these loans over the life of the loan (round to the nearest cent) option a option b b) HOw much interst would the Martinezessave in they chose the 15 year mortgage instead of the 25 year mortgage? Use the rounded mothly payment values from part a ( round your answer to the nearest cent)A borrower has secured a 30 year, $730,000 loan at 5%. 15 years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 3%. However, the up front fees to refinance, which will be paid in cash, are 5 points.. What is balance of the mortgage after 15 years? What is the amount of the fees? Should the borrower refinance if the borrower expects to remain in the home for the next fifteen years? Should the borrower refinance if she plans to relocate after seven years?
- Which of the following statements regarding a 20-year (240-month) $225,000, fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.) The outstanding balance declines at a slower rate in the later years of the loan's life. The remaining balance after three years will be $225,000 less one third of the interest paid during the first three years. Because it is a fixed-rate mortgage, the monthly loan payments (which include both interest and principal payments) are constant. Interest payments on the mortgage will increase steadily over time, but the total amount of each payment will remain constant. The proportion of the monthly payment that goes towards repayment of principal will be lower 10 years from now than it will be the first year.Which of the following statements regarding a 30-year (360-month) $100,000 fixed-rate mortgage is CORRECT? (Ignore all taxes and transactions costs.) Because it is a fixed rate mortgage, the amount paid in interest per payment is constant. With an amortized loan, a bigger proportion of each month's payment goes toward interest in the later periods. The remaining balance after three years will be $100,000 less the total amount of principal paid during the first 36 months. The monthly payment on the mortgage will steadily decline over time.Laura's company buys a property valued at $15,000,000 and finances the purchase with an 70% LTV loan. The bank offers a 25 year amortization schedule with 3.00% interest and monthly payments and requires a balloon repayment after 5 years. If Laura's company holds on to the mortgage at maturity, what will be their balloon payment at the end of the mortgage term? State your answer as a number rounded to the nearest cent (e.g. if you get $13.57654, write 13.58)