Suppose that a borrower wishes to borrow $989,000 today using a partially amortizing 30 year loan. Specifically, the loan has constant monthly payments, a fixed contract rate of 6% includes a balloon payment of $100,000 due at maturity. Compute the lenders yield assuming the borrower holds the loan to maturity.
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Suppose that a borrower wishes to borrow $989,000 today using a partially amortizing 30 year loan. Specifically, the loan has constant monthly payments, a fixed contract rate of 6% includes a balloon payment of $100,000 due at maturity. Compute the lenders yield assuming the borrower holds the loan to maturity.
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