f you issue a thrifty year fixed rate mortgage to finance the purchase of a home you are locked into this rate for thirty years even if interest rates decline over time. You have know way out of this contract other than default. True or False Principal payments due on a fixed rate mortgage decline over time. True False

f you issue a thrifty year fixed rate mortgage to finance the purchase of a home you are locked into this rate for thirty years even if interest rates decline over time. You have know way out of this contract other than default. True or False Principal payments due on a fixed rate mortgage decline over time. True False

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter9: Obtaining Affordable Housing

Section: Chapter Questions

Problem 2LTAI

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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.…
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Sandra has a 30-year, P100,000 mortgage with a nominal interest rate of 10 percent and monthly compounding. Which of the following statements regarding his mortgage is most correct? * a.The monthly payments will decline over time. b.The proportion of the monthly payment that represents interest will be lower for the last payment than for the first payment on the loan. c.The total dollar amount of principal being paid off each month gets larger as the loan approaches maturity. d.None of the statements are correct. e.Statements b and c are correct.
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.
If Bobby takes out a mortgage for 30 years at an interest rate of 4% and his monthly repayments are $835.48, what is the loan principal (that is, the balance of the loan at drawdown)? Give your answer to the nearest ten dollars. Do not include commas or the dollar sign in your answer.
Please check your work! the other versions of answers have been incorrect!! Your new 30-year mortgage includes borrowing $425,000 at an APR of 4.78%. If you paid 20% down when you bought this house, and if the value of the property grows at about 3.0% a year, how much will you have to invest if you seel the house after 14 years? (Ignore here any taxes or fees on the purchase or sale of the house.) Do not round the intermediate calculations. Enter your answer, however, as a dollar number rounded to the nearest whole dollar. No decimals, in other words. Do not enter dollar signs or commas. Numeric Response
Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the beginning, and then you make monthly payments to the lender. You’ve decided to buy a house that is valued at $1 million. You have $200,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $800,000 mortgage, and is offering a standard 30-year mortgage at a 9% fixed nominal interest rate (called the loan’s annual percentage rate or APR). Under this loan proposal, your mortgage payment will be per month. (Note: Round the final value of any interest rate used to four decimal places.) Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a 15-year, $800,000 loan at…
During the last three months interest rates have fallen, and you would like to take advantage of the lower rates that currently exist by refinancing. Refinancing means you pay off the outstanding principal balance on your current mortgage with a new loan at the lower rates that currently exist. If rates have fallen to 3.25%, how much would you save monthly if you refinance at the end of the second month? (assume you take out a new 20-year loan). Show your calculations.
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Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the beginning, and then you make monthly payments to the lender. You’ve decided to buy a house that is valued at $1 million. You have $300,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $700,000 mortgage, and is offering a standard 30-year mortgage at a 12% fixed nominal interest rate (called the loan’s annual percentage rate or APR). Under this loan proposal, your mortgage payment will be per month. (Note: Round the final value of any interest rate used to four decimal places.) Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a 15-year, $700,000 loan at…
Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the beginning, and then you make monthly payments to the lender. You’ve decided to buy a house that is valued at $1 million. You have $100,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $900,000 mortgage, and is offering a standard 30-year mortgage at a 10% fixed nominal interest rate (called the loan’s annual percentage rate or APR). Under this loan proposal, your mortgage payment will be per month. (Note: Round the final value of any interest rate used to four decimal places.) Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a 15-year, $900,000 loan at…