Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1. John wants to buy a property for $110,000 and wants an 80% loan. A lender indicates that a fully amortizing loan can be obtained
1. John wants to buy a property for $110,000 and wants an 80% loan. A lender indicates that a fully amortizing loan can be obtained for 30 years with monthly payments, at 8 percent interest; however, a loan origination fee of $1,000 at the closing will be necessary for John to obtain the loan. a. What is the net amount that the borrower will actually receive? b. What is the effective interest rate for the borrower, assuming that the mortgage is paid off after the full term of 30 years? c. If John pays off the loan after 6 years, what is the effective interest rate? Why is it different from the effective interest rate in part b above
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started