Your mortgage is an ARM with a 1 year adjustment interval, 4% margin, and a 2% periodic cap. Your initial APR on this loan was 4.5%. Over the last 5 years the market rates of interest have risen dramatically. The current interest rate index for your loan is 8.5 %. What APR are your monthly payments being calculated on today? 12.5% O 10.5% O 8.5% 4.5%

Your mortgage is an ARM with a 1 year adjustment interval, 4% margin, and a 2% periodic cap. Your initial APR on this loan was 4.5%. Over the last 5 years the market rates of interest have risen dramatically. The current interest rate index for your loan is 8.5 %. What APR are your monthly payments being calculated on today? 12.5% O 10.5% O 8.5% 4.5%

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 4FPE

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Calculate the payment and rate adjustments for the following scenario. 5/1 Interest Only ARM $600k Loan amount 5% Interest Rate 30 year loan tenure Margin: 2.75 CAPS are 3/2/6 Index: 12 Month Treasury Average 1. What is the payment on this mortgage? 2. If the 5 year fixed period ends this month using the current 12 month Treasury average, what would the fully indexed rate be? Would it be affected by the CAPS? I want you to research the web to determine what the current 12 month Treasury average is. 3. If the 12 month Treasury average jumps to 3.75 for next year's adjustment, what is the new rate considering the CAPS?
2B. a. Suppose we have a four year fixed-payment loan with $900 payments made at the end of each year. Given a market interest rate of 7 percent, how much was initially borrowed?
Problem 5-1 A price level adjusted mortgage (PLAM) is made with the following terms: Amount $95,900 Initial interest rate = 4 percent Term = 30 years = 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years: Required: a. Compute the payments at the beginning of each year (BOY). b. What is the loan balance at the end of the fifth year? c. What is the yield to the lender on such a mortgage?
A price level adjusted mortgage (PLAM) is made with the following terms: Amount = $96,000Initial interest rate = 4 percentTerm = 30 yearsPoints = 6 percent Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years: b. What is the loan balance at the end of the fifth year?c. What is the yield to the lender on such a mortgage? I am having trouble with b. and c.
Problem 54.12 A 10-year $200,000 mortgage will be paid off with level quarterly amortization payments. Assume that the interest rate on the mortgage is 6%, convertible quarterly, and that payments are made at the end of each quarter. Find the modified duration of this mortgage. Do it with formulas and not excel.
profile-image Time remaining: 00 :09 :17 Finance 16. borrower takes out a 30-year mortgage loan for $300,000 with an interest rate of 5% and monthly payments. What portion of the first month's payment would be applied to loan balance? $360.46 $1,100 $300.46 $1,200.90 17.A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The first two years of the loan have a "teaser" rate of 3%, after that, the rate can reset with a 2.5% annual rate cap. On the reset date, the composite rate is 6%. What would the Year 3 monthly payment be? $1,118.41 $1,240.30 $1,100.20 $1300.00 18.A borrower has a 25-year mortgage loan for $200,000 with an interest rate of 3% and monthly payments. If she wants to pay off the loan after 10 years, what would be the outstanding balance on the loan? $137,336.40 $135,333.30 $125,000.20 4139,445.20
n adjustable-rate mortgage resets every year. For the first year, the index rate is 3.3% and the margin is 2.9%. The loan is for $200,000 and has a term of 30 years. What is the required monthly payment (principal and interest) for the first year? 1,426.88 1,708.37 1,224.94 875.9 832.46
Problem 1: You take out an amortized loan for $10,000. The loan is to be paid in equal installments at the end of each of the next 5 years. The interest rate is 8%. Construct an amortization schedule. Problem 2: A. Calculate the PV of $100 due in 5 years compounded daily at 12%. B. Calculate the FV of $1000 due in 3 years at 6% compounded quarterly. C. Calculate the FVA of $300 due at the end of each of the next 5 years at 4%. D. Calculate the PVA of $300 due at the end of each of the next 5 years at 4%. Problem 3: Compute the EAR of 10% compounded daily.
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Question 3: The interest rate for the first five-year term of a $400,000 mortgage loan is 3.3% compounded semi-annually. The mortgage requires monthly payments over a 25-year period. Suppose that, at the end of the third year of the mortgage, the borrower makes a prepayment of $80,000. How much will the amortization period be shortened?
Finance You borrowed $284,000 with an adjustable rate mortgage with a 30 year term.The initial period is 1 year and then the loan adjust every 12 months.The margin is 2.5% and the index is the 5-year Treasury CMT, which is 2% at origination. The initial rate is set at 4%.What is the payment during the second year of the loan assuming that the index rises to 2.5% on the first reset date?There are no caps on this loan.
A price level adjusted mortgage (PLAM) is made with the following terms:Amount $95,000Initial interest rate 4 percentTerm 30 yearsPoints 6 percentPayments to be reset at the beginning of each year.Assuming inflation is expected to increase at the rate of 6 percent per year for the next five years:a. Compute the payments at the beginning of each year (BOY).b. What is the loan balance at the end of the fifth year?c. What is the yield to the lender on such a mortgage?