QUESTION 8 Tim wants to buy an apartment that costs $1,500,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. There are no caps. The index was 1% at the time of origination and remained at 1% during every rate reset. Tim also had to pay 3.0 points for this loan. Compute the true APR (annualized IRR) for this loan. Assume the rate resets after 36 months and then remains constant for the remainder of the loan term.
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- The Allen's want to purchase a house. They can afford $1,025 a month for 20 years and a $23,000 down payment. They finance the loan with an APR of 5.23% mortgage rate for 20 years. Determine the amount of the Allen's loan using TVM Solver on calculator. N= I%= PV= PMT= FV= P/Y= C/Y=8. Tim wants to buy an apartment that costs $1,750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. There are no caps. The index was 1% at the time of origination. Tim also had to pay 6.5 points for this loan. Compute the true APR (annualized IRR) for this loan.6. Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30-year, 3/1 ARM with an initial teaser rate of 3.75% and monthly payments. The reset margin on the loan is 300 basis points above 1-year CMT. The index was 1% at the time of origination. Tim also had to pay 3 points for this loan. Suppose the index rate will remain 1% for the life of the loan. Compute the true APR for this loan. 7. In Q6, compute the IRR for this loan assuming Tim will prepay in 5 years.|
- Qualifying Scenario: Rosanne is buying a home for 900k. She has 110k in liquid assets, a 740 middle credit score, $1200 a month in revolving credit card debt and makes 200k a year. Her lender requires her to have a 90% LTV, 30/43 DTI ratios and 2 months PITI for PCL. The loan will be a 30 year fixed with a 3% interest rate. Her closing costs will be 15k. Escrows will be $1000 a month. She can buy her interest rate down by .125% by paying a half percent discount point. A .25 buy down costs 1 points and so on. She can increase her rate by .125% to get a lender credit of a half point or .25% for 1 point and so on. Does she qualify? If not, why? What can she do to qualify?Tim wants to buy an apartment that costs $750,000with an 85% LTV mortgage. Tim got a 30-year, 3/1 ARMwith an initial teaser rate of 3.75% and monthlypayments. The reset margin on the loan is 300 basispoints above 1-year CMT. The index was 1% at the timeof origination. Tim also had to pay 3 points for this loan.Suppose the index rate will remain 1% for the life of theloan. Compute the true APR for this loan.Compute the IRR for this loan assuming Tim will prepayin 5 years.If you buy a home with less than 20% down, you will pay an additional monthly fee, PMI (private mortgage insurance), until you reach 20% equity. Keep track of when you reach 20% equity so you can request to have your PMI removed. Ken Buckmiller's home recently appraised at $293.000. His mortgage was for $278,000 at 5% for 30 years with PMI of $259.17 per month. What is his monthly payment plus PMI? His mortgage balance is currently $178,100. Has he reached 20% equity? (Use Table 15.1.) Note: Round your intermediate calculations and final answer to the nearest cent. Monthly payment Has he reached 20% equity?
- Tim buys an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75% and monthly payments. The reset margin on the loan is 300 basis points above 1 year CMT. The index was 1% at the time of origination. Tim also had to pay 3 points for this loan. Suppose the index rate will remain 1% for the life of the loan and Tim prepays the mortgage in 5 years. Compute the true APR for this loan. (Write the answer as a percent so for example 2.5% should be written as 2.5, not as 0.025.)please use the formula not excel. 7. Tim wants to buy an apartment that costs $1,750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 4.875%. The reset margin on the loan is 300 basis points above 1 year CMT. There are no caps. Tim anticipates the index to be 3.50% at the time of the 1st reset. If the index resets to 3.50% as Tim forecasts, what will his new mortgage payment be in year 4? 8. Tim wants to buy an apartment that costs $1,750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. There are no caps. The index was 1% at the time of origination. Tim also had to pay 6.5 points for this loan. Compute the true APR (annualized IRR) for this loan.If you buy a home with less than 20% down, you will pay an additional monthly fee, PMI (private mortgage insurance), until you reach 20% equity Keep track of when you reach 20% equity so you can request to have your PMI removed. Ken Buckmitler's home recently appraised at $300,000. His mortgage was for $285,000 at 5% for 30 years with PMI of $229.17 per month. What is his monthly payment plus PMI? His mortgage balance is currently $182,400. Has he reached 20% equity? (Use Table 151) Note: Round your intermediate calculations and final answer to the nearest cent. Monthly payment Has he reached 20% equity? Yes
- Fast Eddie's Used Cars will sell you a 1989 Mazda Miata for OMR5,000 with no money down. You agree to make weekly payments for 2 years, beginning one week after you buy the car. The stated rate on the loan is 13%. How much is each payment? Select one: O a. OMR99.65 O b. OMR68.19 c. OMR54.66 O d. OMR42.96 O e. OMR75.90 Clear my choiceYou purchase a house for $1.3m and you put a 20% down payment and take out a mortgage on the remainder. Your mortgage agreement specifies a rate of 2% APR compounded semi-annually. You will make bi-weekly (every 2 weeks) payments for 25 years. What are your payments (within $40) Make sure to follow our conventions otherwise you may end up choosing the incorrect solutions to the question: 4 decimal places for factor values. 4 positive decimal places for interest rates. Use of factor equations, when available, for all but the (F/P..) and (P/F.) factors. Options: a) 2240 b) 2160 c) 2080 d) 2000 e) 1920 f) None of the aboveBorrower Joe has an existing loan that requires 15 more years of monthly payments of $1,040. He is considering refinancing the loan balance of $117.095.08 with a new loan at the current market rate of 5.675% for 15-year loans. Both the old loan and the new loan require 2 points plus $500 in origination fees. What is the NPV of the refinancing decision at an opportunity rate of 5.675%?