1. If you buy a home all of the mortgage payments you make will increase the value of your equity in the home by that same amount.

True or False

2. Use the following mortgage calculator:

Homebuying Mortgage Calculator | Fannie Mae

You are going to buy a home for $500,000. You will finance 80% of the $500,000 with a thirty-year fixed rate mortgage. The annual interest rate on the mortgage is 4%.

The total monthly interest and principal payments will be $1,910. (plus or minus $25)

True or False

3. In New York State, once you miss a single mortgage loan payment the lender has the right to immediately seize your property and sell it.

https://www.nycourts.gov/CourtHelp/pdfs/Foreclosureflowchart.pdf

True or False

4. A property costs $3 million. It will generate positive cash flows for years 1-15. Cash flow in year 1 is $200,000. Cash flows grow by 15% per year. The property is sold for $5,500,000 at the end of year 15. Your firm will only make real estate investments that offer an internal rate of return greater than 15%. In this case, your firm should make the investment.

True or False

5. Base your answer on the following mortgage calculator.

https://fm.fanniemae.com/homeownership/resources/financial-calculators/mortgage-calculator

The difference between the monthly interest plus principal payments on a thirty-year fixed rate mortgage at 5% versus 4.5% is $130. Assume the property costs $500,000 and you are making a down payment of 20%.

True or False