onsider the following pool of mortgages: •100 mortgages each with initial balance of $182449, interest rate 3.3%, issued for 30 years with monthly payments •80 mortgages each with initial balance of $114129, interest rate 3.2%, issued for 15 years with monthly payments What is the Weighted Average Maturity for this pool at origination? Express your answer in months rounded to 2 decimal points

onsider the following pool of mortgages: •100 mortgages each with initial balance of $182449, interest rate 3.3%, issued for 30 years with monthly payments •80 mortgages each with initial balance of $114129, interest rate 3.2%, issued for 15 years with monthly payments What is the Weighted Average Maturity for this pool at origination? Express your answer in months rounded to 2 decimal points

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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A mortgage has an interest rate of 200 basis points over the treasury rate of 4%, an amortization period of 30 years and an initial principal balance of $2,000,000. What is the annual debt service? What is the ending principal balance at the end of the tenth year?
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A borrower received a 30-year ARM mortgage loan for $200,000. Rate caps are 3/2/6. The start rate is 3.50% and the loan adjusts every 12 months for the life of the mortgage. The index used for this mortgage is MTA (for this exercise, 3.00% at the start of the loan, 4.45% at the end of the first year, and 4.50% at the end of the second year). The margin on the loan is 3.00%, which remains the same for the duration of the loan. 1. What is the initial rate (start rate) the borrower will pay during the first year? 2. What is the interest rate the borrower will pay after the first rate adjustment? (Hint: Remember to use the “stair step method” for determining the new interest rate.) 3. What is the fully indexed rate after the second year? 4. What is the maximum interest rate the borrower will pay during the 30-year term for this loan? 5. If the interest rate is at its maximum, what would the MTA index have to be to reach the maximum interest rate?
A borrower received a 30-year ARM mortgage loan for $200,000. Rate caps are 3/2/6. The start rate is 3.50% and the loan adjusts every 12 months for the life of the mortgage. The index used for this mortgage is MTA (for this exercise, 3.00% at the start of the loan, 4.45% at the end of the first year, and 4.50% at the end of the second year). The margin on the loan is 3.00%, which remains the same for the duration of the loan. What is the initial rate (start rate) the borrower will pay during the first year? What is the interest rate the borrower will pay after the first rate adjustment? (Hint: Remember to use the “stair step method” for determining the new interest rate.) What is the fully indexed rate after the second year? What is the maximum interest rate the borrower will pay during the 30-year term for this loan? If the interest rate is at its maximum, what would the MTA index have to be to reach the maximum interest rate? Instructions: Select Start Draft. Enter your…
A borrower received a 30-year ARM mortgage loan for $200,000. Rate caps are 3/2/6. The start rate is 3.50% and the loan adjusts every 12 months for the life of the mortgage. The index used for this mortgage is MTA (for this exercise, 3.00% at the start of the loan, 4.45% at the end of the first year, and 4.50% at the end of the second year). The margin on the loan is 3.00%, which remains the same for the duration of the loan. What is the initial rate (start rate) the borrower will pay during the first year?
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