The margin on an adjustable-rate mortgage is 2.5% and the rate cap is 5% over the life of the loan. If the current index rate is 6.8%, find the maximum overall rate (as a %) of the loan. %
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- The margin on an adjustable-rate mortgage is 2.5% and the rate cap is 5% over the life of the loan. If the current index rate is 8.8%, find the maximum overall rate (as a %) of the loan. %The margin on an adjustable rate mortgage is 4.5% and the rate cap is 5% over the life loan if the current index is 6.8% find the maximum overall rate as a percentage of the loan.Banks sometimes quote interest rates in the form of “add-on interest.” In this case, if a 1-year loan is quoted with an interest rate of 8.0% and you borrow $1,000, then you pay back $1,080. But you make these payments in monthly instalments of $108 each.a) What is the true APR on this loan?b) What is the effective annual rate on the loan?
- If an adjustable-rate 30-year mortgage for $120,000 starts at 4.0 percent and increase to 5.5 percent, what is the amount of increase of the monthly payment?Banks sometimes quote interest rates in the form of “add-on interest.” In this case, if a 1-year loan is quoted with an interest rate of 8.0% and you borrow $1,000, then you pay back $1,080. You make these payments in monthly instalments of $108 each. 1) What is the true APR on this loan? 2) What is the EAR on the loan?What is the maturity value on a 6-year loan for S7, 585 if the annual simple interest rate is 6.1%? Round your answer to the nearest dollar.
- Assume the following for a one-year rate adjustable rate mortgage loan that is tied to the one- year Treasury rate and has monthly payments: Loan amount:150,000 Annual rate cap:2% Life-of-loan cap:5% Margin:2.75% First-year contract teaser rate:5.50%One-year Treasury rate at end of year 1:5.25% One-year Treasury rate at end of year 2:5.50% Loan term in years:30 years Given these assumptions, calculate the following: a) Initial monthly payment; b) Loan balance end of year 1; c) Year 2 contract rate; d) Year 2 monthly payment; e) Loan balance end of year 2;f) Year 3 contract rate; g) Year 3 payment.A borrower can borrow $10 million at a fixed-rate loan at 7.5% for six years, or a floating-rate loan at LIBOR plus 2%. Assume the current LIBOR rate is 7%. After some consideration, he chooses the fixed rate loan. Did he make the right decision if the LIBOR rates over the next five years were 6.5%, 6.0%, 5.5%, 5.0% and 4.5%?1. Use the appropriate formula to find the future value (in $) of $900 deposited at the beginning of every six months, for 19 years if a bank pays 4% interest, compounded semiannually. (Round your answers to the nearest cent.) $ 2. The margin on an adjustable-rate mortgage is 2.5% and the rate cap is 5% over the life of the loan. If the current index rate is 8.8%, find the maximum overall rate (as a %) of the loan. %
- Given the following information about a fully amortized loan, calculate the lender’s yield (rounded to the nearest tenth of a percent) if the loan were to be paid off in 4 years. Loan amount: $568,000 Term: 30 years Interest rate: 8.23 % Monthly Payment: $4,259 Discount points: 1.5 3rd Party Costs: $7,500 8.60% 7.80% 8.70% 8.50%Assume that a lender offers a 30-year, $148,000 adjustable rate mortgage (ARM) with the following terms: Initial interest rate = 7.5 percent Index = one-year Treasuries Payments reset each year Margin = 2 percent Interest rate cap = 1 percent annually; 3 percent lifetime Discount points = 2 percent Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: Beginning of year (BOY) 2 = 7 percent; (BOY) 3 = 8.5 percent; (BOY) 4 = 9.5 percent; (BOY) 5 = 11 percent. Required: a. Compute the payments and loan balances for the ARM for the five-year period. b. Compute the yield for the ARM for the five-year period.If a lender wants to achieve an APR of approximately 7.0% on a 30-year fully amortizing fixed rate loan for $750,000 with a stated annual interest rate of 6.5%, how many points should the lender charge the borrower? 6 3 5 4