Question
(12 points) Leslie and Ben are interested in a $250,000 fully amortizing loan and are deciding between 2 options, mortgage A and mortgage B Mortgage
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(12 points) Leslie and Ben are interested in a $250,000 fully amortizing loan and are deciding between 2 options, mortgage A and mortgage B
| Mortgage A | Mortgage B |
| Loan term: 30 years Annual interest rate: 5.75 % Monthly payments Up-front financing costs: $4,500 Discount points: 2.5
| Loan term: 15-years Annual interest rate: 5.25 % Monthly payments Up-front financing costs: $7,500 Discount points: 2.5
|
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Calculate the monthly payments for mortgage A and B.
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Calculate the effective borrowing cost for or mortgage A and B.
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Calculate Lenders Yield for or mortgage A and B
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Suppose you are the borrower. Based on the effective borrowing costs, which loan would you choose? Explain your answer in 1-2 sentences.
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Suppose you are the lender. Based on the lenders yield, which loan would you prefer? Explain your answer in 1-2 sentences.
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Financial Intelligence For IT Professionals
Authors: Karen Berman, Joe Knight, John Case
1st Edition
1422119149, 9781422119143
