1. A borrower needs $300,000 in cash to purchase a residential property. The lender offers this borrower a 30 year FRM at 4% with 3 points. The lender also alternatively offers the borrower a 30 year FRM loan for $300,000 and no points with a rate of 4.75%? If the borrower plans to hold the loan for 10 years, what is the difference in effective interest rates between the two loans? (Express your answer rounded to 2 decimal places; for example, if you answer was two and three quarters percent, enter 2.75.)

2. A borrower has a 30 year fully amortizing FRM, with a $300,000 balance, 4.5% rate. There is a 3% prepayment penalty on this loan if it is repaid before 5 years. After 5 years of holding this loan, market interest rates have dropped and the borrower is considering a refinance. A 25 year fully amortizing FRM is available with a 3% rate, and has $3,000 in origination fees. The borrower plans to finance the cost of refinance by adding these fees to the new balance of the loan. If the borrower plans to hold the new loan until maturity, what is the internal rate of return on this loan? (Round to 2 decimal places; if your answer is ten and half percent, enter 10.50.)

3.

Ann got a 30 year Fully Amortizing FRM for $100,000 at an annual interest rate of 7% compounded monthly, with monthly payments.

After 5 years of payments, Ann can refinance the balance into a 25 year Fully Amortizing FRM at an annual interest rate of 5.25% compounded monthly, with monthly payments.

If Ann refinances into this 25 year loan, what will be her monthly savings on her mortgage payment?