1.The two government-sponsored mortgage insurance programs in the U.S. are administered by

• A.the VA and Fannie Mae
• B.the FHA and Ginnie Mae
• C.the VA and the FHA
• D.the FHA and Freddie Mac

2 FHA mortgage insurance:

• A.provides protection to the borrower against losses due to mortgage foreclosure
• B.protects the lender against losses due to fraud and misrepresentation
• C.provides protection to the lender against losses due to mortgage foreclosure
• D.provides protection to both the borrower and lender lender against losses due to mortgage foreclosure

A borrower has secured a 30 year, $800,000 loan at 7%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the up front fees, which will be paid in cash, are $12,500. Should the borrower refinance?(Hint: Review refinancing handout)

Pmt based on old loan

• A.$5,322.4
• B.$4332.4
• C.$2332.4
• D.$332.4

A borrower has secured a 30 year, $800,000 loan at 7%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the up front fees, which will be paid in cash, are $12,500. Should the borrower refinance?(Hint: Review refinancing handout)

Balance after 15 years

• A.$592,150.93
• B.$92150.93
• C.$2150.93
• D.$150.93

A borrower has secured a 30 year, $800,000 loan at 7%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the up front fees, which will be paid in cash, are $12,500. Should the borrower refinance?(Hint: Review refinancing handout)

New PMT based on the new rate

• A.$5,322.4
• B.$4996.9
• C.$2332.4
• D.$332.4

A borrower has secured a 30 year, $800,000 loan at 7%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the up front fees, which will be paid in cash, are $12,500. Should the borrower refinance?(Hint: Review refinancing handout)

Difference in PMT OLD--NEW

• A.$445.5
• B.$335.5
• C.$222.5
• D.$111.5

A borrower has secured a 30 year, $800,000 loan at 7%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the up front fees, which will be paid in cash, are $12,500. Should the borrower refinance?(Hint: Review refinancing handout)

PV of Savings from refinancing

• A.$8, 758
• B.$39,758
• C.$28,758
• D.$18,574

A borrower has secured a 30 year, $800,000 loan at 7%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the up front fees, which will be paid in cash, are $12,500. Should the borrower refinance?(Hint: Review refinancing handout)

What is your decision?

• A.Yes because saving > cost
• B.No because savings < cost
• C.Indifferent because savings = cost
• D.Do not have sufficient info to answer